PURE - Earnings call transcript Q3 2019

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Operator

Welcome to the PURE Bioscience Q3 2019 Results Conference Call.

As a reminder, all participants are in listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. [Operator Instructions]

I would now like to turn the conference over to Terri MacInnis, Vice President of Investor Relations at Bibicoff & MacInnis, Inc. ma'am. ahead, Go

Terri MacInnis

an and Chief you Karl, Operating by fiscal everyone. pleased VP, call are results I'm QX business They food Thank On Finance. Officer; strategy. the good Myers, and Company's Tom Officer. welcome our and operating and to nine-month Hank discuss today on conference to Chief PURE's and safety Lambert, you, is financial afternoon, update Executive call joined XXXX Elliott, to Mark

financial a QX PURE's issued the PURE news XX-Q, release of fiscal afternoon, This page available website, and its filed results SEC's report copies of and Investor Relations website Form on purebio.com. on which are the

in for This days live of recorded. call call. event replay at following being and the A and webcast will remain Company's least the website later XX available will is today the be posted

statements. adoption, factors forward-looking based future include include to market customer prospects, on today other product financial share objectives, performance and be trends, and believes future assumptions PURE developments, current historical discussions These the conditions, expected circumstances. and market in regulatory made business by appropriate development PURE statements Our approvals, including certain

these differ uncertainties Company's statements. and the projected actual forward-looking in results from Risks cause those to may materially

the in XX-Qs You XXXX uncertainties filings in about in on PURE Risk annual these with the XX-K, can in report filings Form and the risks a Company's of and Form find section Factors its discussion on and more information periodic SEC, X-K. including

of covered copyright written future. the conference use available this Company's with This and portion of and assumes cautioned publicly, update are expressed call as on statements. even to of all broadcast statements forward-looking information new any you call these made result, reliance the or PURE are date the only if in These done a may to not by obligation any statements undue place U.S. As no of be is or rebroadcast permission. laws forward-looking becomes this

we loss provide call, refer in such adjusted measures tools net GAAP this results, with On to operations. us as analytical used when with will that additional non-GAAP to combination understand

reconciliations GAAP the provided to press have We most measures directly financial release. in the comparable

I over call Elliott, Finance. would the to Vice President Mark? of now turn Mark

Mark Elliott

Terri. you, Thank

our results previously we prior to effectively XXXX as focus reported while technology QX as safety calls, and building fiscal patented efforts resources solution our as in we simultaneously discussed conference for operating SDC today earlier on on our food commercialization a As managing our continue possible. as

have aid contact transport sanitization subsequent current of and our commercialization for conclusion we financing, and development food surface with now for operations accelerate revenue funding FDA-approved XXXX, markets. disinfectant contact quarter in into XXXX, for place food processing support to PURE the of $XXX,XXX projections the upon Hard the the of and financing Control further as of of fresh commercialization the February the PURE the an fourth Along accelerate estimated and Surface our restaurant our $XXX,XXX produce, Surface PURE fiscal food direct processor our SDC-based food chain our accelerate Hard trucks a both as

fluctuations ended to fiscal with base. decrease was fiscal legacy sales of quarter a food delays product the within XXXX. due XXXX for QX product net XX%, decrease third existing April XXXX our ended XX, in operating discuss customer customer safety our Net for the compared in third now fiscal The sales of April decline due I'll and quarter results. to $XXX,XXX implementation sales a $XXX,XXX, were XX,

the a excluding respectively. inducement in $XXX,XXX, in for and with sold compensation third $X.X excluding was share-based Total fiscal operating million share-based XXXX. ended XX, costs goods cost third of for million, Net XXXX as quarter and fiscal for of $XXX,XXX compensation April third quarter the were and and XXXX and compared quarter the expense, expenses loss, XXXX $X.X loss

for for of months increase product months X%, of product compared with Net $X,XXX,XXX ended XX sales net April an sales in April $X,XXX,XXX, were nine the nine XXXX XXXX. the XX,

revenues as food revenues and nine during excluding million, the operating Core to safety ended nine $X.X by Total months XXXX sold XX, cost XXXX costs share-based respectively. and months April food for safety ended XXXX. increased expenses XX% and of were compared goods the and $X.X compensation million

the inducement $X nine the compensation Net XX, million loss, $X.X was as million expense, for period excluding derivative XXXX. compared in XXXX ended April for income, share-based nine months months to and

quarter We of $X.X operating activities period position cash XX, $XXX,XXX.Cash was ended million. months during million in received nine financing XXXX offset cash by investing cash with $X.X restricted the April used the of and from a activities and

private Board Directors we additional recently working the to disclosed placement various that continues Our to types and breakeven to and financing Company. to the evaluate us assesses our revenue our to meet available raise feature opportunities achieve intend capital under to raised cash those proceeds target, a needs of allow in fund and and needs, flow net to $XXX,XXX us actively we

This concludes now CEO, I the Hank? a strategy Hank over to business for review. Lambert, turn my update. financial will call

Hank Lambert

afternoon, for appreciate discussion. Thanks, We today's certainly Mark. Good everyone. you us joining

The XX%. our food of end in lower adoption the were solutions. impacted delays since SDC revenues timing our nine-month Quarterly and have the quarter, food of installation is safety As were of the customers the of and these core for for period showed adoption growth somewhat solutions. of however, news strong accelerated that quarter, a customer key at by safety good mentioned, and the Mark third orders plus rollout unanticipated number revenues

solutions. safety show ending in SDC-based a that will fiscal antimicrobial stronger food we anticipate As our result, quarter, to our safety non-toxic current food validate revenues, continuing QX July,

our Control Bioscience PURE supply with produce Solutions. processing finalizing Pure SmartWash a agreement initiatives, Highlighting is first

with to marketing in the as Solutions closely produce on SmartWash other the processors. largest work and to continue well both processor final produce users We world, fresh application as products end treated of and the

currently efficacy to apply for PURE use verification. to additional three the future for and are SmartWash verification application at closely with adoption the Solutions in equipped USDA of application safety four and is working to ensure facilities third-party rollout obtain by planned the with customers produce U.S. There facilities USDA the

been used has that food E. in eliminating illness, determined pathogens Listeria. Control by causing conclusively produce industry coli foodborne salmonella, causes safety and PURE leading enhances including the the It

Currently, iceberg customers PURE Control adopt for this lettuce with treated shredded are added the romaine and step. who processing

addition current Control In a processors adoption Tom lead work will on PURE major to treating this give this with processor, our of produce. other direct are you accelerating shortly. update for

QX, processors XX evaluating produce eight processors. had QX, number grew validation optimization we in-house number in QX, testing. that or their own and and conducting was that to XX; In In

Association is build on executives testing that discuss we to will the of Food in when at of extensive the along July. their growing. And with Tom Awareness incremental SmartWash provides SDC mid our Protection processors Myers efficacy solution results of International of produce the

within industry for produce clearly Hard disinfection successful to in environmental new also Tom PURE on that The processing the use as will solutions. They Surface applications committed expanding well elaborate this, extensively development. is plants. of use our their are SDC as

and a in over processors Hard segments, produce, environmentally industry Surface Continuing expanded per pet in averaging PURE and we added wide including food, in environmental Hard is XXX equipment national range meats. and equipment used Surface PURE continue existing more manufacturers most customers with add of our use, bakeries, food plants and customers, than of national to and on applications one week. now and discussion dairy the and branded recent quarter, cheese

is transportation momentum Tom continuing the food in will on Our and gain last also the you solution that. months, acceleration to with give and latest

top of continue In the testing disinfection, hatcheries for five poultry for we initiative our with our egg PURE two Surface producers. Hard

hatching and Our objective processing. is very cross optimize to for high birds. egg growing cleaner Lowering the pathogen-free chick rates environment, ensuring mortality birds reducing entering the contamination and laying, risk

before of be calendar that We able time, we'll At enough anticipate information potential market year. that to metrics. the testing have completed will be to on comment this and end sometime

in To that revenues the sum PURE to processing, transport flow Surface based momentum restaurant the us are plants and that we processing breakeven sanitization are have and increasingly in drive and to beyond on achievable confident Hard growing needed imminent. use cash food produce up and then, chains, we

Tom Chief now our over to Operating turn frontline. for call the from remarks Officer, I'd Tom? like minute up his to to the Myers,

Tom Myers

opportunity I'm Surface the Disinfectant. share of on have and and Good Hank. status execution afternoon, PURE call this today's join you, you ground progress Hard the and marketing boots sales, Thank perspective and everyone. my our to with Control pleased for to PURE both

We work products application final produce in to both to end leaders other fresh continue with to the closely marketing industry of treated and produce suppliers. users and

supply. Marketing present USDA the leads at sponsored In Produce meetings PMA, in to produce one-on-one the our to Also, Bioscience claims recent Solutions provide and and used with numerous had This application U.S. verification used will fact, took PURE been to attend third-party it’s May, SmartWash the safer achieved, place and mentioned, differentiate working verification of lethality as were a process ensure where a where Association as powerful PURE generated. efficacy [ph] to the powerful tool being be obtain process. of will and was

are the the beyond shredded and processors of Control constantly We chopped working produce to PURE with application expand products.

engineering, Control contact multiple global in directly two customer. Control is PURE sales quality completely toward week and enhanced efficacy and being result the first facilities, are of is U.S. is produce the their in used of a PAA current strawberries. proven our treatment, on We plants executives, XX product now the with U.S. processing marketing replacing moving that a with adoptions. PURE QA another times supplier At

be Their same U.S. by facilities, validation that Control is of the rollout months. first tomatoes. processing deployed, XX over plan be July, calendar anticipates told XX separate next tomato its processor used we U.S. Control begin expansion to will their process plans also means XX This on facilities products. end completed two the the PURE XX remaining fully plants this that its PURE the it into will of and on installing were When running that completing year. of into of In

We will for expect produce future their ongoing yield commodities treatment. validation additional work

produce multiple on future providing over facilities products validation across of on dozen to forward look processing fresh the ongoing other a efforts the progress updates industry. We

on turn to I'd information to the like transport. the

with solution continues one distribution largest a is are U.S. of grow. well-received at food approaching has been XX%. transport the and first center food customer, and and penetration to companies, our installations Our Sales progressing distribution our rate

chemistry and Last these fleet of inside that will five and seven quarter, food initial plants, well the end This been the XX June. orders service as use national mandated top they system being expect tell received by will facilities entire environmentally about as we also And distribution all the for by centers. vehicles their we distributor of top five May, be meat XX half This that distributor. their in and progressing distribution installed X,XXX treating mandate In equipment rapidly. another us of PURE centers. from talked adopted has the

XX the additional Today, we transportation have interest drives of four companies. transportation customers, we food word with mouth in and are that discussions

work We of food treat carriers validation continue representing traders to distribution in the a PURE potential to system. with companies, up specialty multiple distribution X,XXX

bin for with Further, on new transport lines, field been PURE that employed initiatives, in whole processors. Surface one new processing the the Surface and Hard produce plants utilizing facilities during been multiple for level have application been designed to of designed by protection sanitization systems and repeatable systems allow entire This of has PURE automated field and have Hard to processing a from along processors, is ongoing button marketed PURE installed.

now. the to an like sanitization sector. a have processing methodology procedures last application we that that not on dairy have working before provides I'd mention developed the quarter. actually new We've for This been been Now, possible direction

other application working over progress powder Today, technology provide misting areas co-ops dry product safety. with report allows and on are enhanced of that dairy dryers we and processors national next will Our the and to and cheese treatment facilities quarters. processing few and

I'll and it you. to turn comments my concludes this back Hank,

Hank Lambert

Tom. Thanks,

revenue remarks optimistic of anticipated on produce flow Based we our calendar Tom’s cash that and run we this achieve of customers, a our year. breakeven plans rate remain leading will rollout the processor goal

As run our they materialize target. $X plans million reach A adoption target. annual customers’ we’ll rate as is long project, as breakeven revenue our our

is in Disinfectant, processing, and which of to and to with which PURE two on expectations adoption FDA rollout the is directly by customers’ PURE produce lines. applied be contact restaurant by cash based our breakeven Hard Our and of EPA present forecast to Surface flow in come food our applied surfaces chains approved and processors manufacturers to food. on during product and approved transportation, Control food continues equipment

a fiscal our Due resetting to a earlier, by delays are that which flow projection to is and say rate customer of are and cash run the that well end to achieve to start. timing we on I'm pleased quarter off breakeven we strong our XXXX, current referenced way is the QX October.

to over call like operator session. turn to I'd Now, Q&A our Karl? to our begin the

Operator

Thank you.

comes Coal. the begin now Christian will The ahead, We Instructions] with question Bozorth [Operator Go sir. question-and-answer Kanawha-Gauley from first session.

Christian Bozorth

you things in about cash the the October? enough question Glad do to My to is, to sales going great hear pipeline. in Thank breakeven all you. have think you on get

Hank Lambert

as Christian. operations are Thank to question. you, working the remarks, breakeven. raising cash we necessary Mark Great Yes. indicated his of capital And in to to process get in flow run the

weeks, in Our that. Board has to and -- that continuing we've and is pursue recent raised pursuing $XXX,XXX are

we We have cash to fund are the will to way flow our breakeven. confident cash

Christian Bozorth

you. I Thank the joining a little call. you. late was Thank

Hank Lambert

Okay, thanks.

Operator

question next private a [ph] Go from comes The Gloria Gaddy, ahead. investors.

Unidentified Analyst

that until would of have issue mean, required in This May we the Are four for chicken. approximately then, no to and and additional with they said back of for I completion you obligation question. I the by back weeks have Online clear no of would assumed that? Hey, Reprocessing would after trial. goes a successful Hank. trial waiting have to they XXXX trial letter USDA they trials a we a be six funds

So, a more have did more asked testing, successful the we USDA? for trial result by or for

something And have sowing may something high great their would didn't and looked the the It used. it in they all et to he online and building. and sites about buildings, referred or but of it with these occurred And be how I America, me it units was, can't needed food, remember PURE were of sales companies Tom, seems then, that. in cetera, cold be I these if how high have at. that like was exactly way and that’s and to you’ve you to sets, missed that big for to refrigerated like a what that know were And place it,

those So, two questions. are my

Hank Lambert

Okay. one. Thanks, Gloria. I'll take the first

and get produce previous online and processors that. had the to we parts, with honest, indicated, really continue closest services parts, we focused of regard on point some transportation some chiller. What calls, We be shifted to on limited we've was opportunities, be. on And well. to online there stops And our we focus on reprocessing months, with expected not have But several to involved were as issues cost with reprocessing, As trials in starts as where were on we as did that to successful testing we testing look especially a then the pre lot solution. we've over we at testing post our resources food in done sales parts. had immersion our past technical to and our and

front a in mentioned the in aids distributors prepared processors. right processing focused with transportation. working specific remarks, on strategic processing two augment our we with as poultry, because food our could them produce to have supply On poultry we strategic are would very distributing where and efforts chain stretched arrangement thin and working resources our We're with -- very, are they of poultry we now the And also who end hatcheries. expertise and are on we

parts we with strategic as more we're to these resources that and we know So, bringing work this bear opportunity against distributors. with

turn and to freezer now answer I'll it areas. misting the And question to Tom over about

Tom Myers

very a that's very question Gloria, good and intuitive.

in mist Gloria, high, a arrangement And testing quarter, it misting type we're been actually fine the air basis be been a different at in with the applied the and regular and to the in units push units have button is treated to once employing level be areas that. last they on in of facilities application. We all to has designed food are that same would that up our where contamination trailers, our transport and those in that's recently, technology determine processing the

is several companies are actually that right on now. working with it we So, something

Operator

[ph] Matthew private Kress, from comes sir. question ahead, Go investor. next The

Unidentified Analyst

capital or wondered the interim debt? ways just you'd before methods reaching or raise like issuance what I what Hi. and to equity, in breakeven more

Hank Lambert

point. issuance used pursue We at Yes. equity. debt placements we've shareholders in past. any would this the Private it that be and typical current We're pursuing with the primarily not will structures all

Operator

are this back question-and-answer any over Lambert This would like now to turn I There the concludes questions time. no more remarks. the closing conference to Hank session. at for

Hank Lambert

you thanks of day. of back I next call. you and our with forward support SDC for Thanks, to your on to to meaningful continuing and our progress a have powerful we your as move look time antimicrobial. continued reporting closer great commercialization Thanks, Karl. our of more each And to rest

Operator

conference today's concludes call. This

may You lines. now day. disconnect you participating, your for a Thank and pleasant have

PURE Bioscience (PURE) 13 Jun 192019 Q3 Earnings call transcript