Q4 2024 SenesTech Inc Earnings Call
Operator: Good day and welcome to the Senestech fourth quarter and fiscal year 2024 financial results conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero.
Good day, and welcome to the southern stores fourth quarter and fiscal year 'twenty 'twenty four financial results conference call.
All participants will be in listen only mode should you need assistance. Please signal specialist professor.
Especially the star followed by zero.
Operator: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your telephone keypad. And to withdraw your question, please press star, then two. Please note, today's event is being recorded.
After todays presentation, there will be an opportunity to ask questions to ask a question you May Press Star then one on your telephone keypad.
Your question. Please press Star then two.
Please note today's event is being recorded.
Robert Blum: And now I'd like to turn the conference over to Robert Blum with some partners. Please go ahead. All right, great. Thanks so much.
Speaker Change: I'd now like to turn the conference over to Robert Blum Lytham Partners. Please go ahead.
Speaker Change: Alright, great. Thanks, so much and thank you all for joining us today as the operator mentioned to discuss so nasdaq's fourth quarter and full year 'twenty 'twenty four financial results and this is for the period ended December 31, 2024 with us on the call representing the company today is Mr. Joel for went the company's Chief Executive Officer, Mr. Tom Chesterman, the company's chief.
Robert Blum: And thank you all for joining us today, as the operator mentioned to discuss Senestech's fourth quarter and full year 2024 financial results. And this for the period ended December 31, 2024.
Robert Blum: With us on the call representing the company today is Mr. Joel Fruendt, the company's Chief Executive Officer, Mr. Tom Chesterman, the company's Chief Financial Officer.
Robert Blum: At the conclusion of today's prepared remarks, we will open the call for a question and answer session. If you dialed into the call through the traditional teleconference line, as the operator indicated, please press star then one to ask a question. And if you are listening through the webcast player and would like to ask a question, you can submit your question through the ask a question feature in the webcast player.
Speaker Change: Actual officer at the conclusion of today's prepared remarks, we will open the call for a question and answer session. If you dialed into the call through the traditional teleconference line as the operator indicated. Please press Star then one to ask a question and if you are listening through the webcast player and would like to ask a question you can submit your question through the.
Speaker Change: Ask a question feature in the webcast player before.
Unknown Executive: Before we begin with prepared remarks, we submit for the record the following statement.
Before we begin with prepared remarks, we submit for the record the following statement.
Unknown Executive: Statements made by the management team of Senestech during the course of this conference call may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 as amended, and Section 21E 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, 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, including 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 the company's filings with the Securities Exchange Commission.
Speaker Change: Statements made by the management team its 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.
Speaker Change: Litigation Reform Act of 1995.
Speaker Change: Forward looking statements describe future expectations plans results or strategies and are generally preceded by words, such as may of future 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.
Speaker Change: 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 the company's filings with the Securities Exchange Commission. All forward looking statements contained during this conference call speak only as of the date in which they.
Unknown Executive: 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.
Were made and are based on management's assumptions and estimates as of such date companies that 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 alright with that said, let me turn the call over to Joel front, Chief Executive Officer Joel. Please proceed.
Robert Blum: All right, with that said, let me turn the call over to Joel Pruant, Chief Executive Officer. Joel, please proceed. Thank you, Robert. And good afternoon, everyone. Thank you all for joining us today for our fourth quarter and year-end conference call. So let's jump right into it.
Speaker Change: Yeah.
Joel Forwent: Thank you Robert and good afternoon, everyone. Thank you all for joining us today for our fourth quarter and year end conference call. So let's jump right into it.
Joel Fruendt: As you saw in the press release, we concluded a truly transformational year for Senestech with record financial results across the board, including quarterly revenues, which were up 70%, and quarterly gross profit margins of 61%, which when coupled with our improvement in our operational efficiencies through cost reductions, resulted in our smallest quarterly adjusted EBITDA loss in company history, as we advance our progress towards profitability. On top of the record results and efficiencies already implemented to date, we are also implementing additional initiatives effective immediately, which are set to further reduce cash burn by $2 million on an annual annualized basis.
Joel Forwent: As you saw in the press release, we concluded a truly transformational year for <unk> with record financial results across the board, including quarterly revenues, which were up 70% in quarterly gross profit margins of 61%, which when coupled with our improvement in our operational efficiencies through cost reduction.
Joel Forwent: This resulted in our smallest quarterly adjusted EBITDA loss in company history, as we advance our progress towards profitability.
Joel Forwent: On top of the record results of deficiencies already implemented to date. We are also implementing additional initiatives effective immediately which are set to further reduce cash burn by $2 million on an annual annualized basis.
Joel Fruendt: These new savings, coupled with the higher gross margins from Evolve, are anticipated to reduce the revenue threshold for cash flow breakeven to $7 million annually, compared to $12 million historically. I will ask Tom to expand more on some of these new initiatives to lower costs in a moment. But let me state up front that our goal is to achieve cash flow break even in the near term, which we believe serves as a significant inflection point for the company. To that end, as Tom will touch on momentarily, we believe the strategic financing we just completed this week will provide us the capital necessary to accelerate our progress to cash flow break-even.
Joel Forwent: These new savings coupled with the higher gross margins from evolve are anticipated to reduce the revenue threshold for cash flow breakeven to $7 million annually compared to $12 million historically.
Joel Forwent: I will ask Tom to expand more on some of these new initiatives to lower costs in a moment.
Joel Forwent: Let me state upfront that our goal is to achieve cash flow breakeven in the near term, which we believe serves as a significant inflection point for the company.
Joel Forwent: To that end as Tom will touch on momentarily. We believe this strategic financing. We just completed this week will provide us the capital necessary to accelerate our progress to cash flow breakeven.
Joel Fruendt: The first. Back to the dramatically improved financial results announced this past quarter and the progress it highlights towards that goal of cash flow breakeven. The improvements are being driven almost entirely by the introduction of our evolved soft bait fertility control solution, which was launched a year ago. It's improved form factor, economical price point, proven efficacy, and lengthy shelf life have allowed us to expand distribution into new retail customers and in market. Evolve continues to be a game changer for Senestech, as well as for the industry. As we have communicated to you for a few quarters now, we have identified a number of key growth objectives that will allow us to continue the positive trajectory we are on.
Joel Forwent: But first back to the dramatically improved financial results announced this past quarter and the progress it highlights towards that goal of cash flow breakeven.
Joel Forwent: The improvements are being driven almost entirely by the introduction of our evolve soft paid fertility control solution, which was launched a year ago.
Joel Forwent: It's improved form factor economical price point proven efficacy and lengthy shelf life have allowed us to expand distribution into new retail customers and end markets.
Joel Forwent: <unk> continues to be a game changer for scenarios tech as well as for the industry.
Joel Forwent: As we have communicated to you for a few quarters now we have identified a number of key growth objectives that will allow us to continue the positive trajectory we are on.
Joel Fruendt: Let me take a moment to walk through the updates on each of these. First, during the year, we successfully launched Evolve Rat and Evolve Mouse on numerous online retailers including Amazon.com, Walmart.com, TractorSupply.com, and DIYPestControl.com. Inclusive of the company's online store at senestech.com, overall e-commerce sales increased 206% during this year's fourth quarter compared to last year's fourth quarter and represented 55% of Q4 2024 revenue. We are still in the early stages of REACH here. with TractorSupply.com coming on in just the last few weeks. We also have seen a nice uptick in our municipal programs. As we discussed briefly last quarter, the New York City Council has approved a bill to implement a rat contraception pilot program.
Joel Forwent: Let me take a moment to walk through the updates on each of these.
Joel Forwent: First during the year, we successfully launched evolve rat and evolved mouse.
Online retailers, including Amazon Dot Com, Walmart Dot com tractor supply dot com and DIY pest control Dot com.
Joel Forwent: Inclusive of the company's online stores, so NASDAQ dotcom overall e-commerce sales increased 206% during this year's fourth quarter compared to last year's fourth quarter and represented 55% of Q4 2020 for revenue.
Joel Forwent: We are still in the early stages of reach here with.
With tractor supply dot com coming on and just the last few weeks.
Yeah.
Joel Forwent: We also have seen a nice uptick in our municipal programs as we discussed briefly last quarter, New York, New York City Council has approved a bill to implement a rent contraception pilot program.
Joel Fruendt: I'm pleased to confirm that we received an order from New York City in December of 2024 for Evolve RAT and that will be shipped in April. The product is initially expected to be deployed in a few locations throughout the city and expand from there based on success parameters being met. Beyond the New York City government deployment, we also signed an agreement with BugOff Pest Control in New York City, as we work directly with customers to implement contraceptive contraception into their IPM program. And beyond New York, in January of this year, the city of Baltimore joined other major cities on the Radius Cities list, such as Los Angeles, by integrating Evolve into their integrated test management strategy.
Joel Forwent: I am pleased to confirm that we received an order from New York City in December 2024 for.
Joel Forwent: For evolve Red and that will be shipped in April the product is initially expected to be deployed in a few locations throughout the city and expand from there based on success parameters being met.
Joel Forwent: Beyond the New York City Government deployment, we also signed an agreement with the bug of Pest control in New York City, as we worked directly with customers to implement a contraceptive contraception their IPM programs.
Joel Forwent: And beyond New York in January of this year the city of Baltimore joined other major cities on the radio city's list such as Los Angeles by integrating evolves into their integrated pest management strategy.
Joel Fruendt: The city placed a substantial initial order for Evolve and is currently deploying the product this quarter as part of its integrated pest management program. Programs have also just begun and orders received in Chicago and the Boston area.
Joel Forwent: The city place to substantial initial order for evolves and it is currently deploying the product this quarter as part of its integrated Pest management program.
Joel Forwent: Programs have also just begun and orders received in Chicago and Boston area.
Joel Fruendt: While everyone loves to talk about the municipal orders, there are a number of other in-market customers that can be significant growth drivers for us going forward. One of these is the warehousing and distribution sector. Just last week, we announced the shipment of a substantial order revolve to one of the largest warehousing and distribution companies in the Midwest. As you might imagine, the warehousing in the United States is huge. Controlling rodent infestations in facilities that store food supplies present unique challenges. As the use of traditional poisons is often not feasible due to safety concerns. Evolve offers a humane and effective alternative, ensuring the integrity of stored products while maintaining compliance with industry regulations.
Joel Forwent: Well, everyone loves to talk about the municipal orders there are a number of other end market customers that can be significant growth drivers for us going forward. One of these is the warehousing and distribution sector. Just last week, we announced the shipment of a substantial order resolved to one of the largest warehousing and distribution companies in the Midwest.
Joel Forwent: As you might imagine the warehousing isn't yet in the United States is huge.
Controlling rodin infestations and facilities that store food supplies present unique challenges as the use of traditional poisons is often not feasible due to safety concerns evolve offers so humane and effective alternative ensuring the integrity of stored products, while maintaining compliance.
Joel Forwent: With industry regulations, we are excited to expand into this exciting new vertical.
Joel Fruendt: We are excited to expand into this exciting new vertical.
Joel Fruendt: Another key area for us has been to expand our reach internationally. Again, Evolve, with its soft bait form factor, has permitted this to occur. To date, we have signed distribution agreements in 10 separate countries to distribute Evolve, including a letter of intent signed with Esmar Corporation in India just a few weeks ago. As we have communicated in the past, international distribution often requires country-specific registrations. To date, we have obtained approval and ship product to Hong Kong. to the United Arab Emirates. the Netherlands, and the Maldives. Our distributors in Australia, New Zealand, and India are in the final stages, with large orders already set to be shipped upon approval for both countries.
Joel Forwent: Another key area for us has been to expand our reach internationally.
Joel Forwent: Again evolved with its <unk> eight form factor has permitted this to occur to date, we have signed distribution agreements in 10 separate company countries to distributed valves, including a letter of intent signed with <unk> Corporation in India, just a few weeks ago.
Joel Forwent: As we have communicated in the past international distribution offer often requires country specific registration efforts.
Joel Forwent: To date, we have obtained approval.
Joel Forwent: And ship product to Hong Kong.
In the United Arab Emirates.
Netherlands and the Maldives.
Joel Forwent: Our distributors in Austria, Australia, New Zealand and India are in the final stages with large orders already set to be shipped upon approval for both countries.
Joel Fruendt: Others continue to work through the registration process, and we expect further approvals during the remainder of the year.
Joel Forwent: Others continue to work through the registration process and we expect further approvals during the remainder of the year.
Joel Fruendt: Another key initiative we have been working on has been brick and mortar retail chains. During the year, we launched Evolve in Ace Hardware stores and brought on manufacturers representative agencies targeting retail, co-op and big box chains to inventory Evolve in their stores. The process is largely driven by longer purchasing cycles by retailers, with initial e-commerce proof points considered key determining factors. We just returned from events for MidStates Distributing, ACE Hardware, and Orgo Hardware Distribution. We saw enthusiasm and orders from individual stores, but more importantly, we're finalizing plans with both to stock their warehouses as a standard product.
Joel Forwent: Another key initiative, we have been working on has been brick and mortar retail chains. During the year, we launched evolved in ace hardware stores and brought on manufacturers representative agencies targeting retail co op and big box chains do inventory evolve in their stores.
The process is largely driven by longer purchasing cycles by retailers with initial ecommerce proof points considered key determining factors.
Joel Forwent: We just returned from the events for mid states distributing ace hardware and Oregon hardware distribution.
Joel Forwent: We saw enthusiasm and orders from individual stores, but more importantly, we are finalizing plans with both to stock their warehouses as a standard product.
Joel Fruendt: Our progress on e-commerce and the individual store orders positively influence these discussions. So those are the key drivers that lead to, that led to the rapid growth this past year in the fourth quarter in particular. Growth in e-commerce, expansion into municipal markets, expansion into new end markets, and expansion internationally. Our team continues to aggressively pursue each of these areas and others. to bring our Evolve solution to the market. And as I stated at the beginning, as this growth continues, which when coupled with higher gross margins and lower operating expenses, positions us well to achieve our goal of cash flow breakeven.
Joel Forwent: Our progress on ecommerce and the individual's store orders positively influence these discussions.
Joel Forwent: So those are the key drivers that lead to that led to the rapid growth. This past year in the fourth quarter quarter in particular growth in e-commerce expansion into municipal markets expansion into new end markets and expansion internationally.
Joel Forwent: Our team continues to aggressively pursue each of these areas and others.
Joel Forwent: To bring our evolve solution to the market.
Joel Forwent: And as I stated at the beginning as this growth continues which when coupled with higher gross margins and lower operating expenses.
Joel Forwent: <unk> us well to achieve our goal of cash flow breakeven.
Tom Chesterman: With that, let me turn the call over to Tom Chesterman, who's going to review the financials in more detail.
Speaker Change: With that let me turn the call over to Tom Chesterman, Who's going to review the financials in more detail I will then wrap up with a few closing comments before taking questions Tom.
Tom Chesterman: I will then wrap up with a few closing comments before taking questions.
Tom Chesterman: Tom. Thank you, Joel. We will be filing our 10k shortly, but let me hit the financial highlights. But start with what Joel mentioned at the beginning was the strategic financing that we completed this It doesn't look like much at first glance, a warrant repricing at the market that raised $1 million, but we also included $4 million of short-term warrants. We've had great success with warrants historically, raising capital with much more lower dilution than public offerings. To some extent, this can be seen as an alternative to a $5 million public offer. priced at the money instead of at a discount.
Thank you Joel we will be filing our 10-K, shortly but let me hit the financial highlights.
Let's start with what Joel mentioned at the beginning was the strategic financing that we completed this week. It doesn't look like much at first glance, a warrant repricing at the market that raised $1 billion, but we also included $4 million of short term warrants. We've had great success with warrants historically raising capital with much more lower dilution.
And public offerings.
To some extent this can be seen as an alternative to a $5 million public offering priced at the money instead of at a discount.
Tom Chesterman: With this cash, along with our existing cash in our ATM facility under which we've already raised $1 million during the first quarter, as well as for the efficiencies mentioned, we can confidently pursue the initiatives discussed by Joel on our pathway to profitability. I should note that we do not reprice warrants without careful consideration. We do everything we can to initiate execute our initiatives, such as warrants or exercise natural Now to the numbers.
Speaker Change: With this cash along with our existing cash and our ATM facility under which we've already raised $1 billion during the first quarter as.
Speaker Change: As well as from the efficiencies mentioned, we can confidently pursue the initiatives discussed by Joel on our pathway to profitability.
Speaker Change: I should note that we do not reprice will launch without careful consideration, we do everything we can to execute our initiatives.
Speaker Change: Warrants are exercised naturally.
Speaker Change: Now to the numbers.
Tom Chesterman: For the fourth quarter revenue increased 70% to a record quarterly record of $501,000 for the year revenue increased 56% to $1.9 million. As Joel touched on, quarterly growth was driven by the market acceptance of our evolved products and growth in e-commerce. Breaking it down by product, Evolve Rat was 52% of Q4 sales. Evolve Mouse represented 24%, while our historical contrabass product was the remainder. For the year overall, evolved rat was 53% and mouse 12%. From a product growth perspective, Evolve RAT was up 365% in Q4 from a year ago period, while there were no sales in Evolve Bounce in the year ago fourth quarter, as it was just launched in May of 2024.
For the fourth quarter revenue increased 70% to a record.
Speaker Change: Record of 500 to $1000 for the year revenue increased 56% to $1 9 million.
Speaker Change: As Joe touched on quarterly growth was driven.
Speaker Change: Okay.
The market acceptance of our <unk> products and growth in E Commerce.
Speaker Change: Breaking it down by product evolve rat was 52% of Q4 sales.
Speaker Change: Evolve mouse represented 24%, while our historical contract this product was the remainder.
Speaker Change: For the year overall evolve rat was 53% and 12%.
Speaker Change: From a product growth perspective evolve rat was up 365% in Q4 from a year ago period, while there were no sales and evolve.
Speaker Change: A year ago fourth quarter and it was just launched in May of 2024.
Tom Chesterman: ContraBest was down 51% as customers convert to the Evolve solution. Looking at revenues by channels, e-commerce represented our largest channel at 55% of our Q4 sales. This was followed up by pest management professionals and international distributors. As Joel mentioned, e-commerce growth has been extremely strong. with Q4 eCommerce sales up 206% from the year ago fourth quarter. with the addition of TractorSupply.com and hopefully others, we expect these screen trends to continue. As we said in the past, our evolved product line represents a higher margin opportunity for Senestech and it is proving this out. Ever-improving manufacturing operations give us both pricing and margin flexibility.
Speaker Change: <unk> was down 51% as customers convert to the <unk> solutions.
Speaker Change: Looking at revenues by channels E. Commerce represented our largest channel that at 55% of our Q4 sales. This was followed up by pest management professionals and international distributors.
Speaker Change: As Joel mentioned E Commerce growth has been extremely strong lately with Q4 ecommerce sales up 206% from the year ago fourth quarter.
Joel Forwent: With the addition of tractor supply dot com and hopefully others, we expect.
Speaker Change: The stream trends to continue.
Speaker Change: As we said in the past our vault product line represents a higher margin opportunity for domestic and it is proving this out.
Speaker Change: Improving manufacturing operations give us both pricing and margin flexibility.
Tom Chesterman: Gross margin for this quarter was 61% compared to 44% in the year ago fourth quarter. From a dollar standpoint, gross profit dollars increased 136% in Q4 2024 compared to Q4 last year.
Speaker Change: Gross margin for this quarter was 61% compared to 44% in a year ago fourth quarter.
Speaker Change: From a dollar standpoint gross profit dollars increased 136% in Q4 2024 compared to Q4 last year.
Tom Chesterman: As I mentioned last quarter, we're also increasing production capacity to meet future demand. We have secured a newer, larger facility in Phoenix that will allow us to meet the next five years of increasing demand without dramatically increasing our facility costs. We expect to move to this location during the first half of this year. As you saw from the results, we continue to hold the line on OPEX as well, but are implementing a new series of optimization initiatives to further reduce expense.
Speaker Change: As I mentioned last quarter, we're also increasing production capacity to meet future demand. We have secured a newer larger facility in Phoenix that will allow us to meet the next five years of increasing demand without dramatically increasing our facility costs.
Speaker Change: We expect to move to this location during the first half of this year.
Speaker Change: As you saw from our results we continue to hold the line on Opex as well.
Speaker Change: A new series of optimization initiatives to further reduce expenses.
Tom Chesterman: The first is Pausing New Product Development to Focus Exclusively on the Commercialization and Growth of the Evolved Rat and Evolved Mouse. Second, we are bringing marketing, regulatory and intellectual property functions in-house to reduce reliance on external consultants. And finally, we are optimizing our direct sales efforts, shifting to a more proactive approach focused on high value customer acquisition in key customer segments, such as e-commerce and retail, and focusing on commission only models such as distributors and manufacturer representatives. All told, we will cut our cash burn by about 30%, from $1.5 million per quarter to about $1 million per quarter.
Speaker Change: The first is pausing new product development to focus exclusively on the commercialization and growth of the evolve rat and evolved mouse.
Second we are bringing marketing regulatory and intellectual property functions in house to reduce reliance on external consultants.
Speaker Change: And finally, we are optimizing our direct sales efforts 15th through a more proactive approach focused on high value customer acquisition and key customer segments.
Speaker Change: E Commerce, and retail and focusing on commission only models, such as distributors and manufacturer Representatives.
Speaker Change: All told we believe we will cut our cash burn by about 30% from $1 $5 million per quarter to about $1 million per quarter.
Tom Chesterman: These savings, coupled with the higher gross margins and the operating efficiencies gained on manufacturing, is expected to move our cash flow break-even level to a little over $1.5 million per quarter. As we've discussed, this can be achieved very quickly with one or two big box sales. rapid expansion of brick and mortar retail or municipal or large scale agriculture or international sales.
Speaker Change: These savings coupled with a higher gross margins and the operating efficiencies gained on manufacturing.
Speaker Change: Do you expect it to move our cash flow breakeven level to a little over $1 $5 million per quarter.
Speaker Change: As we've discussed this can be achieved very quickly with one or two big box sales.
Speaker Change: Rapid expansion of brick and mortar retail or municipal.
Speaker Change: Our large scale agriculture or international sales, we have any number of shots on goal coming up.
Tom Chesterman: We have any number of shots on goal coming With the revenue growth plans we have, higher gross margins, lower OPEX, and a strategic funding completed that can provide the funds necessary to achieve cash flow breakeven, I believe we have reached that inflection point that many companies and investors are looking for. There is still execution work to be done, but the pathway is clear.
Speaker Change: With the revenue growth plans, we have.
Speaker Change: Gross margins lower Opex any strategic funding completed they can provide the funds necessary to achieve cash flow breakeven I believe we've reached that inflection point that many companies and investors are looking for.
Speaker Change: There is still execution work to be done, but the pathway is clear.
Tom Chesterman: Let me turn the call back to Joel. Thanks, Tom.
Joel Forwent: Let me turn the call back to Joel.
Bill.
Joel Forwent: Thanks, Tom.
Joel Fruendt: Just a couple of closing comments. We are committed to executing a focused strategy that positions Senestech for sustainable long-term success. by concentrating our most impactful growth areas. Improving the cost efficiencies and streamlining operations, we are taking decisive steps to achieve profitability. This is the inflection point everyone has been looking for, and we are on the pathway to achieving it.
Joel Forwent: A couple of closing comments.
Joel Forwent: We are committed to executing a focused strategy that positions <unk> for sustainable long term success.
Joel Forwent: By concentrating our most impactful growth areas.
Joel Forwent: Proving the cost efficiencies and streamlining operations, we are taking decisive steps to achieve profitability.
Joel Forwent: This is the inflection point, everyone has been looking for and we are on the pathway to achieving it.
Joel Fruendt: is the only manufacturer of U.S. EPA-registered and accepted products for the reduction of reproductive capacity in rodents. We have a tremendous opportunity ahead of us to change the game of how the pest control industry, municipalities, agriculture, warehousing, and consumers in general, address the problem of rodent infestation. With evolved in its improved form factor, economical price point, proven efficacy and lengthy shelf life, we have addressed all the key product attribute requirements communicated to us by the industry. Our financial results are highlighting the progress made, and with initiatives in place to continuing driving rapid adoption of our innovative solutions, I believe we are in a great position as we enter 2025.
Speaker Change: As the only manufacturer of U S. EPA registered an accepted products for the reduction of reproductive capacity in rodents.
Speaker Change: We have a tremendous opportunity ahead of us to change the game of how the pest control industry municipalities agriculture, warehousing and consumers in general address the problem of rodent infestations.
With evolved and it's improved form factor economical price point proven efficacy and lengthy shelf life. We have addressed all the key product attribute requirements communicated to us.
Speaker Change: The industry.
Speaker Change: Our financial results are highlighting the progress made and with initiatives in place to continuing driving rapid adoption of our innovative <unk> innovative solutions.
Speaker Change: I believe we are in a great position as we enter 2025.
Joel Fruendt: Thank you to everyone for their time today.
Speaker Change: Thank you to everyone for their time today.
Operator: Operator, let's open the lines for questions. Yes sir, thank you. If you'd like to ask a question, please press star then one on your telephone keypad. If you'd like to withdraw your cell phone queue, please press star then two.
Operator, let's open the lines for questions.
Yes, Sir thank you if you'd like to ask a question. Please press Star then one on your telephone keypad.
Speaker Change: To enjoy yourself from the queue. Please press Star then two.
Samir Joshi: Our first question today comes from Samir Joshi with H.C. Wainwright. Please go ahead. Hey, thanks. Good afternoon, Joel, Tom. Congrats on all the progress and the new initiatives for reducing costs, optimizing costs. Looks good. Thank you. Just a few questions.
Speaker Change: Our first question today comes from Sameer Joshi with H C. Wainwright. Please go ahead.
Speaker Change: Hey, Thanks, Good afternoon, Joel Tom Congrats on all the progress.
Speaker Change: And the Union.
Speaker Change: You bet.
And costs optimizing costs look good.
Speaker Change: Thank you just a few questions.
Speaker Change:
Joel Fruendt: The opportunity in New York, you're shipping your first initial product for the pilot in April. Do you have some sort of visibility into how big it could get? And what, over a period of time, say six to eight to nine months? Yes, so they're laying out the, we're going to, they want to start the project April 27th. There's two 10 block areas that they're going to focus on. Our technical people will be there with them, helping them assess where the base station should be placed and the product placement. And then they're going to monitor those areas, and then as they see progress, they may add additional areas.
Speaker Change: Opportunity in New York, Yeah, you're shipping.
Speaker Change:
Speaker Change: Our product for the pilot.
Speaker Change: Napkin.
Speaker Change: Do you have some sort of visibility into how big it could get Oh.
Speaker Change: And what.
Speaker Change: You'll have time see six to eight to nine months.
Speaker Change: Yes, so that they're laying out the.
Speaker Change: They want to start the project.
Speaker Change: April 27th.
Speaker Change: Theres 210 block areas that theyre going to focus on our technical people will be there with them helping them.
Speaker Change: Assess where the bait stations should be placed in the product placement.
Speaker Change: And then they are going to monitor those areas and then as they see progress they may add additional areas. So while it is hard to predict how much it could spread.
Joel Fruendt: So while it's hard to predict how much it could spread, we think that getting it on the ground floor in those areas, which will require some significant product usage itself, that we could see some really good opportunities there for growth by adding sections to it.
Speaker Change: We think that getting it on the ground floor in those areas.
Speaker Change: What's what's really requires some significant product usage itself.
Speaker Change: We could see some some really good opportunities there for growth by adding sections to it.
Unknown Executive: For more information visit www.fema.gov Yeah, no, that that is a significant opportunity.
Speaker Change: Yeah.
Speaker Change: Yes.
Speaker Change: Significant unfortunately, but I think you also highlighted the e-commerce side.
Joel Fruendt: But I think you also highlighted the e commerce, sorry, the warehousing distribution channels as well. In addition to the online efforts for warehousing, like What does your sales effort look like? Well, in the warehousing sector, For more information visit our website www.fema.gov food supplies, food production, right? There's the the issue of how are you going to control rodents there? Because rodents actually like to go to the where the food is. But really, there's not an opportunity to use a lot of the lethals there. So we had in September and October, some good field tests that were done at some of the warehousing facilities.
Speaker Change: With housing.
Jonathan: Jonathan This is Linda.
Jonathan: In addition to the online efforts.
Jonathan: Warehousing.
Jonathan: Like.
Jonathan: What are what are they what are you seeing thats, where it looked like.
Speaker Change: Well in the warehousing sector.
Jonathan: Wherever there is.
Jonathan: Food supplies food production right. There's the issue of how are you going to control Roadmaps, there because road and this would actually like to go to the.
Jonathan: Where the food is.
Jonathan: But really there's not an opportunity to use a lot of the lethal Sir so.
Jonathan: We had.
Jonathan: <unk>.
Jonathan: September and October some good field tests that were done at some of the warehousing facilities and now we're moving into where they're starting to order pallets of material to deploy the product. There. So it's a it's a huge marketplace with warehousing and distribution.
Joel Fruendt: And now we're moving into where they're starting to order pallets of material to deploy the product there. So it's a it's a huge marketplace with warehousing and distribution. And we see opportunities across the board in those areas, not only in food production, but in storage of other types of products as well.
Jonathan: And we see opportunities across the board.
Jonathan: And those areas not only in food production, but in storage of.
Jonathan: Are there other types of products as well.
Jonathan: Understood on that.
Joel Fruendt: On the e-commerce front, I think more than 50% of your sales are coming from those platforms. Is this just a word of mouth, like a pull, or are you spending any ad dollars or awareness dollars on this? Yeah, we have, we have ad dollars we spend for Google ads and a lot of online search engine optimization and pay per clicks. And so really starting to hit our stride there. And, you know, our Amazon sales were recorded their largest increase in quarter over quarter recently. And we're excited about that and just getting started on Tractor Supply.
Speaker Change: E Commerce Sun I think more than 60% of your sales are coming from from from those platforms.
Is this just a word of mouth.
They go well or is there any I guess.
Speaker Change: Spending any ad dollars or awareness.
Speaker Change: This.
Speaker Change: Yes, we have we have.
Speaker Change: AD dollars, we spend for Google ads and a lot of online search engine optimization and pay per clicks and.
Speaker Change: So really starting to hit our stride there.
Speaker Change: Our Amazon sales.
Speaker Change: Were recorded their largest increase in quarter over quarter recently and.
Speaker Change: We're excited about that and just getting started on tractor supply.
Joel Fruendt: And we do have some programs on walmart.com to help us gain traction and gain customers there in the short term.
Speaker Change: We do have some programs on Walmart dot com to help us gain traction in gaining customers there in the short term.
Unknown Executive: Unknown Executive, Joel Fruendt, Unknown Executive, Joel Fruendt, Unknown Executive, Joel Fruendt, That was Cash Burn. for AdjustedUF.com. Goddard.
Speaker Change: Understood.
Speaker Change: One clarification question, Tom I think describe the reduction from $1 5 million to $1 million on a quarterly basis, what is that the cash burn or was that the opex I may have missed this sorry.
Speaker Change: It was cash burn.
Speaker Change: And for adjusted EBITDA.
Speaker Change: Got it.
Joel Fruendt: And then, one last one, I think in the press release you mentioned the Luer vape dispenser. Is there anything, any visibility on how that offering is going and what kind of contribution do you expect from that? It's a great accessory item because it allows our product to be used in areas that would be hard to put a bait box, so if you're going to hang it in the attics or want to put it on a fence post, put it out in a garden. So while not a high revenue item because it's relatively inexpensive, it allows access to other areas that will allow more of our product to be used in those areas.
And then one last one.
Speaker Change: I think you mentioned the lower base.
Speaker Change: Dispenser.
Speaker Change:
Speaker Change: Is there anything or any visibility on how that offering business.
Speaker Change: Going in.
Speaker Change: Kind of contribution do you expect from that.
Speaker Change: It's a great accessory item because it allows their product to be used in areas that would be hard to put a bait box. So if youre going to hanging in there and they.
Speaker Change: Alex or want to put it on a fence post.
Speaker Change: I would put it out in the garden.
Speaker Change: So while not a high.
Speaker Change: High revenue item.
Speaker Change: Because it's relatively inexpensive it allows access to other areas that will allow more of our product to be used in those areas, but we just got back from some of these shows and we've had a lot of interest in an unexpected amount of.
Joel Fruendt: But we just got back from some of these shows and we've had a lot of interest and an unexpected amount of orders for the Delure product in order to hold the Evolve product, so we're really excited about that. Yeah, no, the I think the dispensing technologies become more important than the product itself many times. So it's good to see that you're seeing that attraction. Yeah, and you know, what we have with our, with our ContraPest product, we have the Elevate system. And so this is the Evolve equivalent of the Elevate system and has really gotten the attention of those customers that want to put the product in unique areas.
Speaker Change: Orders for the the lower product in order to hold the products. So the whole hold the evolved products. So we're really excited about that.
Speaker Change: Yes, no I think the dispensing.
Speaker Change: Uh huh.
Speaker Change: Technology has become more important than the product itself. Many times. So it's good to see that youre seeing that traction as well.
Speaker Change: Yes.
Speaker Change: Yes with our.
Speaker Change: With our <unk> product, we have the elevate system and so this is the evolve equivalent of the elevate system and.
Speaker Change: It's really gotten the attention of.
Speaker Change: Those customers that want to put the product and unique areas.
Unknown Executive: Yeah, no. And I think even retail customers might find this attractive and easy to use.
Speaker Change: Yeah, no and I think even retail customers, Mike Glenn this attractive and easy to use so it sounds good.
Samir Joshi: So sounds Thanks a lot for taking my question. Always good to talk to you. Thank you.
Speaker Change: Thanks, a lot Paul.
Speaker Change: Taking my questions.
Speaker Change: Oh, it's good to talk to you.
Thank you and as a reminder, if you'd like to ask a question. Please press Star then one at this time well pause.
Operator: And as a reminder, if you'd like to ask a question, please press star than one at this time. We'll pause for just a moment to assemble our roster. All right. Operator, looks like no questions on the live call at the moment.
Speaker Change: Cause for just a moment to assemble our roster.
Speaker Change: Yeah.
Speaker Change: Alright.
Speaker Change: It looks like.
Speaker Change: No questions on the live call at the moment, so we'll jump over to the webcast.
Unknown Executive: So we'll jump over to the webcast.
Unknown Executive: Joel, Tom, I've got a series of questions here. I'll just sort of start working through them. First one here, and in touch a little bit on this, but there's been a number of significant contracts signed in late 2024 and early 2025 here. Sort of talk about how long it is expected for these to sort of contribute to meaningful revenue growth. And is there any sort of a revenue forecast that you have for 2025?
Speaker Change: Joel Tom Ive got a series of questions here I'll, just start off I'll start walking through them.
Speaker Change: First one here.
Speaker Change: Touched a little bit on this but there's been a number of significant contracts signed in late 2024, and early 2025 here sort of talking about how long. It is expected for these sort of contribute to meaningful revenue growth and is there any sort of a revenue forecast that you have for 2025.
Joel Fruendt: Joel, Tom, I've got a series of questions here. Well, being a regulated product, the difficulty is, is how are you going to get state approval? How long does it take to get state approvals, local approvals? Sometimes when you get approvals, then they want to do field trials. So I think what you're seeing here is the results of work that we did in early and mid 2024 to get our product out in the hands of field personnel and regulatory personnel do the necessary legwork in order to get it approved. And then once we get the product approved, then show the customers that want to use it within those marketplaces that it works, and they like to put their hands on it.
Speaker Change: Well being a regulated product. The difficulty is is how are you going to get state approval, how long does it take to get state approvals local approvals, sometimes when you get approvals then they want to do field trials.
Speaker Change: So I think what Youre seeing here is the results of work that we did in early and mid 2024 to get our product out in the hands of field personnel and regulatory personnel do the necessary legwork in order to get it approved and then once we get the product.
Approved then show the cusp.
Speaker Change: Customers that want to use it within those marketplaces.
Speaker Change: That it works and they like to put their hands on it so well I don't want to give a revenue forecast for.
Joel Fruendt: So while I don't want to give a revenue forecast for the rest of this year, what I will say is that, you know, we were working really hard all of last year. So you're starting to see some results from the things that we were doing a year ago. And we'll continue to see that because we had a lot of progress that was made in the middle and the end of 2024, which should bode well for us going forward. Great.
The rest of this year, what I will say is that.
Speaker Change: We were working really hard all of last year, so you're starting to see some some.
Speaker Change: The results from the things that we were doing a year ago, and we'll continue to see that because we had a lot of progress that was made in the middle and the end of 2024, which should bode well for us going forward.
Speaker Change: Okay great.
Joel Fruendt: Next question here. And you think talked a little bit about this in your prepared remarks, but talk about some of the traction within the big box retail. Well, we've had, you know, Ace Hardware was really the first one that that we talked with and said, yeah, we think that our, our, our stores and dealers would really like this product. And so that was a little less than a year ago. And we've gotten to the point where now we're under consideration to be put into their warehouses at their recent market that they have twice a year.
Speaker Change: Next question here and you talked.
Speaker Change: <unk> talked a little bit about this in your prepared remarks, but talk about some of the tracks.
Speaker Change: Traction within the big box retailers here.
Speaker Change: Well we've had.
Speaker Change: Ace hardware it was really the first one that that we talked with and said yeah, we think that R. R.
Speaker Change: Our stores and dealers would really liked this product and so that was.
Speaker Change: Little less than a year ago, and we've gotten to the point, where now we're under consideration to be put into their warehouses at their recent market that they have twice a year.
Joel Fruendt: The number of orders we got from this market over the other one was up about a thousand percent. So we're in a really good spot there as we move forward. I think some of the dot-com e-commerce will lead to us getting into the brick-and-mortar stores and looking at both Tractor Supply and walmart.com. The other big thing is that, as I mentioned in the remarks, We have some really well tied in rep agencies that are representing us at all of the big retailers. And so we're hoping to have some really good news on some developments there going forward in the near future.
Speaker Change: The number of orders we got from this market over the other one was up about 1000%.
Speaker Change: So there we're in a really good spot there as we move forward.
I think some of the dot com.
Speaker Change: E Commerce.
We will lead to us getting into the brick and mortar stores and looking at both tractor supply and Walmart Dot com.
Speaker Change: The other big thing is that as I mentioned in the remarks.
Speaker Change: We have.
Speaker Change: Some really well.
Speaker Change: Well tied in rep agencies that are representing us at.
Speaker Change: All of the big retailers and so we're hoping to have some really good news on some developments there going forward in the near future.
Unknown Executive: Okay, great.
Speaker Change: Okay great.
Joel Fruendt: Next question here. It says the review case studies and empirical evidence are all extremely positive for Evolve. It seems it's only a matter of getting the word out now. Is this also what you're seeing on your end? And how do you plan to deploy capital to increase awareness and Well, as Tom, as Tom mentioned earlier, and we've had some improvements that we think we're making, we're streamlining some things. I think that, you know, what you see is we we have a really good marketing plan for the year. So we're going to continue on with our, our marketing plans, being able to, to reach more of the the end markets that we pursue, you know, I mentioned municipality, certainly when we start deploying in New York City.
Speaker Change: Question here. It says the review case studies and empirical evidence are all extremely positive for evolve. It seems it's only a matter of getting the word out now.
This also what you're seeing on your end and how do you plan to deploy capital to increase awareness and sales.
Speaker Change: Yes.
Well as Tom as Tom mentioned earlier, we've had some.
Speaker Change: Improvements that we think we're making we're streamlining some things I think what you'll see is we have a.
Speaker Change: Really good marketing plan for the year. So we're going to continue on with our our marketing plans.
Speaker Change: Being able to to reach more of the the end markets.
Speaker Change: That we pursue mentioned municipality certainly when we start.
Speaker Change: Deploying in New York City and.
Joel Fruendt: And, you know, recently, we just got the an order from one of the areas within Chicago, you're going to see some good public relations campaigns built around those. Because we think one of the most important things is that we got to be able to get the word out there on where it is working in and how it's going. And once we do that, then we start, you can start to see the the landslide of others that are interested in it. So we're going to, we're going to keep up our, our plans to get the word out.
Speaker Change: Recently, we just got.
Speaker Change: An order from one of the areas within Chicago, you're going to see some good.
Speaker Change: Public relations campaigns built around those.
Speaker Change: Because we think one of the most important things is that we got to be able to get the word out there on where it is working and how it's going and once we do that.
Speaker Change: Then we start you can start to see the landslide of others that are interested in it. So we're going to we're going to keep up our our plans to get the word out before in social media. We are going to continue to to do the things necessary to drive business both to the e-commerce sites as well.
Unknown Executive: We're on social media, we're going to continue to, to do the things necessary to drive business, both to the e commerce sites, as well as through our distribution channels. And we're set up well in the distribution channels. And that's once again, is from the work that we did in 2024. All right.
Speaker Change: As through our distribution channels, and we're set up well in the distribution channels and that's once again is from the work that we did in 2024.
Alright again, just a quick reminder to everyone on the webcast player. If you have a question you can type it into the.
Operator: Again, just quick reminder to everyone on the webcast player, if you have a question, you can type it into the question box there. And again, if you're dialed in live to the teleconference line there, you can press star then one to ask a question.
Speaker Change: Question box, there and again, if you're dialed in live to the teller.
Speaker Change: Teleconference line. There you can press Star then one to ask a question.
Speaker Change: A couple more questions here for you John Tom with a 60% gross margin now can you lower the price of your products and increased sales enough to cover the lower margin.
Joel Fruendt: A couple more questions here for you, Joel and Tom. With a 60% gross margin now, can you lower the price of your products and increase sales enough to cover the lower margin? Talk sort of about the elasticity of demand. Absolutely. So, you know, we're, we're at a price point where we're right in line with competitive products that are within the industry. But we are looking at really ramping up revenue. So that may involve some discounts for larger orders from some of our distribution channels. And we think that once we get a regular cadence, moving within our manufacturing facility, that we're going to be able to reduce the price out in the field as well as lower our cost and be able to hold those margins steady.
Speaker Change: Talk sort of about the elasticity of demand.
Absolutely.
Speaker Change: No.
Speaker Change: We're at a price point, where we are.
Speaker Change: Right in line with competitive products that are within the industry.
Speaker Change: But we are looking at really ramping up revenue so that may involve.
Speaker Change: Some discounts for larger orders from some of our distribution channels.
And we think that once we get a regular cadence.
Speaker Change: Moving within our manufacturing facility.
Speaker Change: We're gonna be able to reduce the price out in the field as well as lower our cost and be able to hold those margins steady.
Tom Chesterman: All right, and that that last point there, I think dovetails into what may be the last question here. Are there any limitations or constraints to being able to manufacture and supply product for can you continue in these significant revenue increases? Are there cost savings to higher production level?
Speaker Change: Alright, well and that that.
Speaker Change: Last point, there I think dovetails into what may be the last question here are there any limitations or constraints to being able to manufacture and supply product for can you continue and these are significant revenue increases are there cost savings to higher production levels.
Speaker Change: Yes.
Tom Chesterman: Tom, you should take that one. Okay, I would love to. So, first, no, we don't have the constraints. We've built our supply chain management and our manufacturing processes to be able to expand seamlessly into larger demand. As for the efficiencies, yes, absolutely. We've been working on that. The manufacturing team here in Arizona has done a very, very good job of increasing batch size, reducing waste. They're always making improvements to the process. And as we move to our new location, we expect to be doing more and more of that. One of the things that is out there is that the larger you get in terms of your manufacturing process, the more automation options there are as well.
Speaker Change: Tom you should take that one.
Speaker Change: Okay, I would love to.
Speaker Change: No.
Speaker Change: First no we don't have the constraints.
Speaker Change: Our supply chain management, and our manufacturing processes to be able to expand seamlessly into larger demand.
Speaker Change: As for the efficiencies, yes, absolutely we've been working on that that the manufacturing team here in Arizona has done a very very good job of.
Speaker Change: Increasing batch size, reducing waste, they're always making improvements to the process and as we move toward new location, we expect to be doing more and more of that one of the things that is out there is that the larger you get in terms of your manufacturing process the more automation.
Speaker Change: Options of arch as well and these are relatively low investments.
Tom Chesterman: And these are relatively low investment improvements to the process. And to be honest, it is explicitly in the goals and objectives for the manufacturing team to find these efficiencies and find the automation and move forward to an ever-improving manufacturing process.
Speaker Change: Improvements to the process and is exclusive to be honest. It is explicitly in the goals and objectives for the manufacturing team.
Speaker Change: To find these efficiencies and find DLC automation.
Speaker Change: And move forward to an ever improving manufacturing.
Speaker Change: Manufacturing process.
Unknown Executive: All right, fantastic. I am showing no further questions.
Joel Forwent: Alright, fantastic I am showing no further questions. So Joel maybe I'll turn it over to you for any closing remarks.
Joel Fruendt: So Joel, maybe I'll turn it over to you for any closing remarks. Well, thanks once again, for being online and listening to our story. We're excited about where we're at. We're excited about all the work that we did in 2024, that is going to pay off for us in 2025. And we feel that our future, our near future is very, very bright. And we look forward to telling you all about it on our next conference call. Thank you.
Speaker Change: Yeah.
Speaker Change: Well, thanks, once again for being online and listening to our story, we're excited about where we're at we're excited about all the work that we did in 2024 that is going to pay off for us in 2025, and we feel that our.
Speaker Change: Our future our near future is very very bright and we look forward to telling you all about it on our next conference call.
Speaker Change: Thank you.
Operator: This concludes today's presentation. You may now disconnect your lines and have a wonderful day.
Speaker Change: Today's presentation you may now disconnect your lines and have a wonderful day.
Yeah.
[music].