TOMI Environmental Solutions(US:TOMZ)2023-05-16 01:17Financial Data and Key Metrics Changes - For Q1 2023, consolidated net revenue was $1,582,000, down from $2,309,000 in Q1 2022, reflecting a decrease of approximately 31.5% [31] - Consolidated gross profit margin was 59.5%, compared to 61.4% in the prior year [31] - Consolidated operating loss increased to $1,188,000 from $660,000 year-over-year [31] - Consolidated net loss was $1,187,000 or $0.06 per share, compared to a net loss of $659,000 or $0.03 per share in the previous year [31] - Adjusted EBITDA was a loss of $941,000 compared to a loss of $280,000 in the prior year [31] Business Line Data and Key Metrics Changes - The recognized revenue for the quarter was $1,582,000, with a customer sales backlog of approximately $1,547,000, totaling around $3,129,000 [5] - Higher margin solution sales are growing, with recurring solution sales currently accounting for about 15% of total revenue, expected to increase as more CES systems are put into production [35][36] Market Data and Key Metrics Changes - The EPA's proposed reduction of ethylene oxide emissions by 80% at 86 commercial sterilization locations in the U.S. presents a significant market opportunity for TOMI's SteraMist products [6] - The company is expanding its distribution network, including partnerships with various medical and scientific suppliers, which is expected to enhance market reach [8][9] Company Strategy and Development Direction - The company is optimistic about improved financial results for the remainder of 2023, driven by an expanding sales backlog and distribution network [6] - TOMI is focusing on international expansion, particularly in Europe and Africa, to establish partnerships and increase sales [18][19] - The company is actively seeking to enhance its presence in the cannabis industry, with ongoing studies demonstrating the efficacy of SteraMist in eliminating contaminants [14][15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving profitability in the second half of 2023, despite the lumpy nature of revenue recognition [37] - The company is working on multiple fronts to strengthen its market position, including expanding its product offerings and enhancing customer engagement [30] - Management highlighted the importance of ongoing studies and partnerships in driving future growth and revenue [13][19] Other Important Information - The company has launched a new website to improve customer engagement and reflect its mission [16] - TOMI is involved in various studies to prove the efficacy of its products against specific pathogens, which could lead to new market opportunities [13][16] Q&A Session Summary Question: What is the recurring revenue from the BIT solution? - Management indicated that margins on recurring solution sales are higher than typical, around 60%, with 15% of revenue attributed to these sales [34][35] Question: Will the company achieve profitability in 2023? - Management reaffirmed the goal of profitability in the second half of the year, citing strong expectations for improved performance [37] Question: How does the custom engineered systems business drive predictable sales? - Management explained that upfront equipment purchases lead to consistent solution usage, enhancing predictability in revenue [39] Question: Any updates on competition from LifeClean? - Management stated that there is no comparison between SteraMist and LifeClean's product, emphasizing SteraMist's superior efficacy and environmental safety [41][42] Question: What is the status of the shield study? - Management noted that the study is with the authors, and results are expected to be discussed in the next quarter [43] Question: Any progress with the large seed company? - Management confirmed positive progress in food safety testing and ongoing discussions with potential users [44] Question: Is the company comfortable with its current cash position? - Management expressed comfort with the cash position but emphasized the need for deposits from CES systems to improve cash flow [47]