Q4 2023 TOMI Environmental Solutions Inc Earnings Call

None: [music].

Yeah.

None: Good afternoon, everyone and welcome to the Tommy Environmental Solutions, Inc Conference call.

At this time, all participants have been placed on a listen only mode and we will open the floor for your questions and comments after the presentation.

None: It is now my pleasure to turn the floor over to your host John Nesbitt, Sir the floor is yours.

None: Yeah.

John Nesbitt: Good afternoon, and thank you for joining us today for the Tommy Environmental Solutions Industrial update conference call on today's call is telling me as Chief Executive Officer, and Chairman of the Board Dr. Holden Shane Thomas Chief Operating Officer, EJ, Shane and tell me as Chief Financial Officer, Nick Jennings, Dr. Shane will provide an overview of recent business highlights fight.

John Nesbitt: <unk> and future plans, DJ and Nick will be available for the Q&A.

John Nesbitt: Allophone replay of today's call will be available through April 15th 2020 for the details of which are included in the company's press release dated April one 2020 for a webcast replay will also be available at.

John Nesbitt: Tell me as website Www Dot Tony Best Dot Com. Please note that information contained within this presentation is relevant only to the date, which was recorded April one 2024, and you were there for it.

John Nesbitt: Advised the time sensitive information may no longer be accurate at the time of any replay certain written and oral statements made by management of Tony May constitute forward looking statements as defined in the private Securities Litigation Reform Act of 1995. These forward looking statements should be evaluated in light of important risk factors that could cause actual results to differ materially from our anti.

John Nesbitt: As a pair results the information provided in this conference call is based upon the facts and circumstances known at this time the company undertakes no obligation to update these forward looking statements. After the date of this call.

John Nesbitt: In addition, Tony will discuss certain non-GAAP financial measures. During this call. The company uses non-GAAP measures because it believes they provide useful information about operating performance it should be considered by investors in conjunction with the GAAP measures.

Speaker Change: With the GAAP measures a reconciliation of these non-GAAP measures to comparable GAAP measures is included in the earnings release dated April one 2024, I will now turn the call over to Tommy's, Chairman and Chief Executive Officer, Dr. Albert Chen Please.

Albert Chen: Please go ahead good afternoon, everyone and thank you for joining the tell me environmental earning call.

I hope everyone had a nice Easter Sunday.

Albert Chen: Today, we will provide operating and financial results for the full year 2023, along with an update on a few key carrier and focuses for the company.

During our 2023 calendar year, we delivered multiple custom engineered systems to key customers diversified our product lines to support our expanding customer base and the related utilization of our Steri Mrs technology and continue to build out our sales.

Albert Chen: Structure through the expansion of our distribution network.

Albert Chen: Our year over year revenue declined due to the timing of certain customer orders.

Albert Chen: And the long.

Albert Chen: Frustrating long approval processes.

Albert Chen: There was tremendous progress made in 2023 within the company and we continue to do business with Premier companies around the world Our list of clients keep getting larger and our latest product mix with the Steri must transport Steri missed integrated system and.

Albert Chen: The plus and hybrid puts us in a great position to provide much improved financial results moving forward.

Albert Chen: As stated throughout last year, we remain focused on expanding our internal external sales infrastructure and business development initiatives last year, we expanded our presence both domestically and on an international basis with new customers across our division.

Albert Chen: <unk> sales representatives and brought a distribution network to the United States.

Albert Chen: Most recently in November of 2023, we announced the addition of sterile grow.

Albert Chen: The state space distributor in consultation company in the food and cannabis market. Several grow has demonstrated noteworthy achievements in the cannabis and food markets specializing in controlled environment agriculture.

Albert Chen: Particularly in integrating systems for large scale indoor cannabis cultivation.

Albert Chen: In November 2023, we entered in consulting agreement with beams L. L C to strengthen and expand the tell me Steri mesh network and increased business development in the commercial market.

Beans L. L. C brings over 20 years' experience, establishing strategic vision and direction of large institutions and companies spanning multiple industries, including higher education not for profit health care.

Albert Chen: Consultancy hospitality and pharmaceutical sectors.

Albert Chen: Our sales infrastructure is in a much better place now compared to where we were last year at this time and we anticipate the increased bandwidth.

Albert Chen: Of our internal and external sales channels, we will have a positive impact on our revenue in 2024 and beyond.

Albert Chen: Demand for Rcs has grown as we completed and delivered four CES systems in 2023, expanding our growth.

Growing portfolio of projects.

Albert Chen: In the first quarter, we delivered a C S system to Orange <unk> Therapeutics, a leading biotechnology company located in Massachusetts.

During the second quarter, we delivered an 11 applicators CES system to avid bio services.

Albert Chen: <unk> for implementation in Avon's, new purpose built in viral vector development and manufacturing facility in Costa Mesa, California.

Albert Chen: During the third quarter of 2000, and we delivered a three applicators CES system to Reagan Institute of M. G. H M I T and Harvard for implementation in their research and clinical lab located in Cambridge, Massachusetts.

Albert Chen: And then the third quarter of 2023, we delivered our CES hybrid system to indigo pharmaceutical in Las Vegas, Nevada.

We anticipate these additional systems will not only contribute to growth in our solution revenues moving forward, but will also lead to more referrals as they serve as a great marketing tool for us.

Albert Chen: Our brand recognition continues to grow market share as we March forward towards becoming the standard in the industry.

Albert Chen: We continue to diversify our base of products in 2023 with the introduction of stereo Ms hybrid and sturdiness transport to support our ongoing commitment to providing superior disinfection decontamination solutions for our growing customer base.

Albert Chen: The company remains active in our marketing initiatives and attended and presented our Steri Misbranded products at seven different trade shows during the fourth quarter alone.

Albert Chen: Our in House service team is performing well Steri missed I H P service team saw a year over year growth of 13% through December and has continued to perform well through quarter one of this year.

Albert Chen: Earlier this month, we announced a new ground breaking study demonstrating the effectiveness of our solution against foot and mouth disease virus F. M. D. V. This significant advancement supports the company's submission for an additional E T a label.

Albert Chen: During 2023, we also completed a study conducted in accordance with the U S Department of defense biological select agents and toxin bio risk program office, which demonstrated steri Miss I H P. As an effective technology for decontamination of biological toxoid.

Albert Chen: In a study funded by the U S D E and Ni FAA, which demonstrated steri Miss IH T. As an effective treatment of the formed weighing virus known as D. W V contaminated hive.

Albert Chen: Straights.

Albert Chen: The following are our company's forthcoming initiative.

With both new and existing partners insights into our product development endeavors.

Albert Chen: Our strategies in place to drive revenue growth our revenue numbers for 2023 are not an accurate reflection of the progress we made during the year positioning the business for long term growth.

Albert Chen: The strength of our pipeline comprised of key players in various industries that gives us confidence.

Albert Chen: Key objectives include closing more C E S. A custom engineered system sales driving future revenue growth.

Albert Chen: Ensuring that parents CES installations are fully qualified and begin generating the anticipated bit solution revenue.

Albert Chen: Driving traction for the S. I S are staring this integrated system, thus fostering repeat business with Oems of decontamination and closures.

All while maintaining growth of the IH corporate service revenues and expanding capital equipment purchases of our mobile equipment to both existing and new customers and distributors.

Albert Chen: To increase the success rate of winning bids for the CES custom engineered system, we are focusing on several key areas cusp.

Albert Chen: Customers now have many options available to them in the implementation of Steri missed IH P as their decontamination solution.

Albert Chen: With CES emerging as a preferred choice for many.

Albert Chen: A crucial factor in securing successful C H.

Albert Chen: Bids lies in perfect timing and budget this involves aligning to design.

Albert Chen: Construction and budget aspects of our project built to create an optimal environment for Steri Miss E S or any fully permanent automated system to be their choice.

Albert Chen: With these elements aligning our chances of winning these large bids increased significantly.

Albert Chen: One advantage told me environmental is currently enjoying is the cultivation of strategic contacts at these important moments.

Albert Chen: For instance, a recent successful bid wasn't initially solicited for our technology nor was it a primary interest for the end user.

Albert Chen: However, the designers of the project recommended and preferred our solution leading to a steri must win.

Albert Chen: We are actively entering into more and more relationships with these designers and construction firms to expand our outreach by staying connected and informed about upcoming projects.

Albert Chen: We can position ourselves for success.

Albert Chen: Our internal initiatives aimed at enhancing communication and engagement are well underway.

Albert Chen: And we are confident that these efforts will yield positive results.

Albert Chen: Currently.

Albert Chen: We are in discussions with many companies regarding approximately 60, plus bids involving some sort of told me story mist integration over the many coming years extending beyond the immediate fiscal period.

Albert Chen: Our second initiative involves ensuring that all 15 installations are operational and generating bit solution revenue.

Albert Chen: To date the <unk>.

Albert Chen: Final qualifying step for six of our 15 installations are coming to a close with the last expected to be completed by June of this year.

We anticipate that once fully functional and operational bits solution revenue streams.

Albert Chen: Will equate to approximately $600000 for our current bids only assuming each facility maintains the current planned production schedules.

Albert Chen: While the SaaS plan translates into less this solution revenue then the CES product due to the smaller scale of enclosures. Its significance lies in enhancing told me his reputation as a versatile and youth.

Albert Chen: A friendly decontamination solution technology.

Albert Chen: The ability to offer quick and effective solution for biological safety cabinets.

Albert Chen: S C S decontamination chambers and various other enclosures for medical devices reinforces our position as a leading decontamination solution provider.

Albert Chen: We are currently engaged in communication and testing and registration procedures to ensure the efficacy in compliance of these solutions further solidifying our presence in the market.

Albert Chen: IHS service revenue has been a steady and reliable source of income for our company.

Albert Chen: Consistently showing growth over time.

Albert Chen: It serves as our entry point into many organizations, allowing us to showcase the effectiveness of our solutions firsthand.

Albert Chen: Once clients experienced the quality of our services.

Albert Chen: They often choose to engage with us for additional purchases.

Albert Chen: However in today's economic climate.

Albert Chen: <unk> considerations often influence decision making.

Albert Chen: As a result, many clients opt for routine service treatments that align with their financial plans. This trend reflects the current market dynamics and budget constraints faced by businesses.

Albert Chen: Yeah.

Albert Chen: In addition to these new launches, we anticipate a surge in sales for our legacy surface unit and a well received sterile pack handheld devices. This growth will be facilitated by collaborative efforts with Patty ohlinger of beams and revamping our told me service network.

None: Excuse me.

None: The <unk> Pro certified program represents a significant evolution.

None: From the <unk> service network, it will not only extend its reach internationally.

None: But also broadening scope beyond remediation companies to include in House service providers.

None: The program will offer a top tier training branches covering various aspects from steri Miss usage to infectious disease management and indoor air quality control.

None: Participation in the program will entail an annual fee granting access to continuous learning opportunities.

None: Digital conferences and future affiliate products.

None: Additionally, members can expect roundtable discussions and other collaborative platforms to facilitate knowledge sharing and networking.

None: This initiative reaffirms, our commitment to providing comprehensive support and resources to our partners worldwide.

None: I want to highlight the ongoing momentum of our partnership initiatives encompassing collaborations with key entities such as <unk>.

None: <unk> copy ambulance manufacturers, both directly and through our Canadian distributor. This N G. P O Nestle and other committed European distributors Universal Disinfection. These partnerships remain pivotal to our growth strategy.

Providing us with access to new markets and opportunities.

None: We will shortly announce a recent developments, including an advancement incentives <unk> testing capabilities.

None: Pursuit of our new EPA label.

None: Whether or not that's steri mist can play a role in controlling the environmental impact of <unk> and <unk> also known as the forever chemicals, along with follow up on our marketing plan and how to take advantage of the loss in the medical sterilization industry.

None: As approximately $20 million. It makes our 20 billion medical devices are sterilized per year with ethylene oxide and an EPA regulation is restricting its usage, which could create a significant market void that may be filled with alternative sterilization processes such as.

None: <unk> told me is patented binary ionization technology.

A brief overview of our financial results for the full 2023 compared to the full year of 2022.

None: Our consolidated net revenue was <unk> 7 million to 355000 compared to 8.338 million and the timing of orders, including holidays, the masses of signatures needed for order progression affected our revenue.

None: Consolidated gross profit was 58, 3% compared.

None: Compared to 67% the decrease in gross profit was due to a product mix more CES and mobile the consolidated operating loss was 3.349 million compared to $2 million 822000, our consolidated net loss was $3 million.

None: 403000, or <unk> 17 per basic and diluted share compared to $2 million 880000 or 15.

None: Per basic share moving to the balance sheet as of December 31, our cash cash equivalents was approximately $2 3 million working capital was $7 9 million and our shareholder equity was $8 4 million.

None: As far as a positive the feedback from investors.

None: I was just notified that high wire the contractors' success platforms for builders and owners of capital projects has just announced the recipient of its prestigious safety Award.

None: <unk> told me Environmental solutions received the Gold Safety Award.

None: <unk> management systems are critical to any company's ability to deliver successful outcomes and most importantly to keep their employees safe telling me environmental solutions has done a remarkable job implementing a strong safety management system, resulting in exceptional safety.

None: Performance and results.

None: A little about high wire, it's a contractor success platform for asset owners general contractors and facility managers.

None: Some of the world's most admired organizations, including.

None: Skanska, which is a Swedish company is about $15 billion in revenues Bond brothers, it's been around since 18 86, as a civil infrastructure and Merck, who we all know a multinational company based in Germany active in 66 countries, leading science technology with <unk>.

None: <unk> healthcare life Sciences and electronics.

With that being said I want to thank you all for joining us today and for your unwavering support as investors and followers of our company a big Thank you to our team around the World who has helped lay the foundation for our company to become the world's leader in disinfection and Decontaminate nation space we are.

None: <unk> correctly with the right conversations taking place to move us forward and replace the archaic methods and increase the idea of proactive over reactive approaches we will now open.

None: Two questions and answers operator.

None: Certainly.

None: At this time, we'll be conducting a question and answer session. If you have any questions or comments. Please press star one on your phone at this time we.

None: We do ask that what posing a question. Please pickup your handset if you're listening on speaker phone to provide optimum sound quality.

None: Once again, if you have any questions or comments. Please press star one on your phone please.

None: Please hold while we poll for questions.

None: Thank you. Your first question is coming from Jack Williams from <unk> Capital. Your line is live.

Alright, thanks for taking the question.

Jack Williams: So you guys launched a handful of new products in 2023.

Jack Williams: Can you provide some color around these new products expand our addressable market.

Jack Williams: Our third most of the kind of for existing customers or verticals.

Jack Williams: Okay.

None: Want to take that if he can.

Yes, certainly.

None: Hello, everyone.

None: So that the new product launches for both current customers and.

None: New customers there.

None: Made in design for a variety of different industries. For example, the transport maybe only designed for emergency services.

None: The N b plus and the sermon integrated system Standalone version, two that will be launched lie that interfax and 15 days in New York.

<unk> seen a lot of results there considering they were designed with a lot of the customers will be meeting extra as well.

Got it that's helpful. Thank you.

None: Okay.

None: Yeah.

None: Thank you once again, everyone. If you have any questions or comments. Please press star then one on your phone. Please hold while we poll for questions.

None: Your next question is coming from John Nelson Your line is live.

John Nelson: Hi, Halden and team thank.

John Nelson: Thank you for taking my questions. My first question is no.

John Nelson: Do you have.

John Nelson: The cash resources to get you to.

John Nelson: Profitability.

None: We believe we do.

At the moment and we do have the resources in place yes.

None: Okay. Good.

None: And can you kind of give them.

None: Give us some update on <unk>.

None: Some of the various opportunities that you've been exploring in past sessions.

None: Regarding.

None: Food produce and hospital cleaning and semiconductor plants.

Pearl: In service Pearl.

Pearl: Okay.

Pearl:

Pearl: Operations.

None: Sure Andrew.

Andrew: Yeah as as mentioned on the call we're worried vamping the T S N into.

Andrew: Into a professional certified program.

We will be issuing various badges as levels of achievement, and we think that bringing that domestic and internationally with the new hires we have.

Andrew: We will be extremely beneficial to the company.

Andrew: As far as the ambulances, we have customers or distributors that have customers in both North America, Canada, and the United States, that's interested in our transport.

Andrew: And we're hoping to see movement this year in that area.

Food safety is every time I give a.

Andrew: Quarterly update seems to be getting busier and busier, there's a tremendous interest out there in the food safety and from both transportation processing and a general protective food safety.

Andrew: A country and as the World because you know obviously food prices are going up.

Andrew: Foods, becoming more scarce, so that I think will be fighting for the lead.

Andrew: Our divisions with life Sciences in the very near future.

Andrew: Hospitals, we are still coming out with new marketing this year for the hospital markets and.

Andrew: With some of the advancements in some of our new pathogens.

Andrew: That they're going to be looking to replace a lot of the excess of disinfection equipment that they bought during the Covid pandemic, which by now is either not working or they are ready for something new so we see a pretty bright horizon and in all those areas.

I don't know if I missed any but.

Andrew: Semi routers are medicines, but we really haven't done much with yeah, we haven't done much with it yet, but I think it's going to be definitely another market that should be interested in our product.

None: Okay and.

None: What about exploring.

None: The use of.

None: Ceramist are in.

None: Arresting the substitution for ethylene oxide.

None: I mentioned that on the call too and I think that's going to be.

None: A very interesting new niche for us.

None: Now the point being this ethylene oxide.

None: P. A is putting some real restrictions on both from a <unk>.

None: Indore.

None: Environmental and outdoor environmental aspect and it has a lot to do with exhausting out from these large.

None: <unk>.

None: Medical sterilization facilities medical material supplies equipment.

None: And you know.

None: It's going to be an expensive process to change their exhaust system. So I think some of them will end up probably changing it and stay with ethylene oxide.

None: Many will be looking for alternatives that are more eco friendly and less cost of genetic. So you know I think we have a great opportunity here, we still have a little bit of regulatory stuff to go through that we're working on and there should be some interesting updates in future, earning calls about that.

None: Okay, and I know you're exploring.

None: Exploring.

None: Possibilities.

None: Use of your solution in addressing the P fast and people.

None: Problems.

None: Can you give us any more details about how you would go about using your product to them.

None: Treat.

None: That problem.

None: Well, so I mean, it's I.

None: I really can't I can do it on a personal basis, which I will right now, but you know as a company where the amount of employees, we have and with the amount of effort and work is just heard that we're doing.

None: It's not up there it's on our list to accomplish this year.

None: I think both from water safety and from.

None: These areas, where these yards are that they keep throw in this.

None: All of these forever chemicals.

None: I think we potentially have a shot at breaking them down and eliminating it.

None: They are put into certain bins that we treat or the process itself.

None: So we're still looking at it I am more than anyone in the company.

And.

I'm, hoping that because that would be if we're able to break into any aspect to that whether it's the way that these products. These forever chemicals are breaking into our food supply through the soil and through the roots of plants or whether it's into the water supply or literally that there they're just.

None: Toxic in the environment.

None: It will be a great win both from a financial aspect of our company and from a humanitarian aspect of of what this product can do for the world.

None: Good thank you.

None: And then you know you.

None: You mentioned.

None: Delays.

None: And then of course fourth quarter revenues would you expect most of that to catch up in Q1 or just or older than that no.

None: Three or four quarters.

I think that will probably it's going to be a little strange I think of the second and third quarter.

None: Usually are not are stronger quarters, we're going to be a really strong quarters for us.

None: I think we will definitely be showing profitability by van and.

None: I think once we do that in the future we will be there going forward into 2025 2026, we have a tremendous amount of bids out there and people interested in you know even just before I E.

None: On the call I looked at three emails in three different vertical of people that want our product over the competitor so.

None: Yeah.

None: We have a really good group of good plan and as the call stated the right initiatives going forward to make it a profitable company.

Okay. Good.

None:

And.

I'm, just and dressing the competition.

None: Oh is it.

None: Struck me as you know told me having a.

None: Far superior product too.

None: In the markets that you're addressing.

Has.

None: Is there anything that's changed on the <unk>.

Competitive level.

None: And Lance you.

None: You know three to six months.

No I don't follow it as much as I used to.

None: Because when it comes down to it nothing can compete to us.

From a time.

None: And <unk>.

None: Efficiency standpoint, so the fact that we're not caustic that where the quickest then and probably the most.

None: <unk>.

None: You know, it's going to be hard to find anybody competing unless they are violating our patent and then we'll go after them but at.

None: At the moment.

None: We need to grow the company.

None: You know and we need to close out these deals going forward and to maintain and become profitable and maintain profitability.

None: Okay excellent. Thank you very much.

None: Support and I know, it's been a while.

None: Thank you that concludes our Q&A session I'll now hand, the conference back to management for closing remarks. Please go ahead.

None: Once again I just wanted to thank everybody for your support and for joining us today and I Hope you.

None: Have a great rest of the year.