SNES - Earnings call transcript Q2 2019

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Operator

Good afternoon, and welcome to the SenesTech Second Quarter Fiscal 2019 Financial Results Conference Call. All participants will be in listen-only mode. [Operator Instructions]. After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions]. is event this note being recorded. Please

now Mr. Robert would sir. like Please to to over conference the Blum ahead, turn go I of Partners. Lytham

Robert Blum

you ended discuss SenesTech’s of quarter XXXX thank today. Thank for today’s XXXX. second Cole, the results joining period On will for XX, us all we call financial much, very June you and

the prepared the Ken Executive Officer; Chief we us With company’s Financial the a the Chief Siegel, call on today’s the question-and-answer call company’s conclusion Officer. open will session. At Tom remarks, today Chesterman, of are for and

live Please webcast of note that ask listeners both able be call on questions. as the well portion as to the will

If into you type can box the your you the are question and on webcast, question press submit.

questions for. many will will take as as permit time We

questions dialed the If in, pressing button usual. ask will you by as are X Star you

we call prepared team the XXE Securities Section the Before as Section conference the this pursuant during remarks, such Reform of the the begin statements made SenesTech of within statements XXA by of submit we made of statements. management meaning the following may forward-looking for of contain the of Securities XXXX, Statements course with XXXX, record amended, amended, XXXX. forward-looking are and Act Private and provisions Harbor Securities Act of Safe to as Exchange Litigation the of Act of the

risks various from will in that differ Securities plan and projected. differ planned, statements, or other identified the materially a that events that the our projected statements cause result are the forward-looking or of and in risks circumstances, the forward-looking preceded generally materially in actual of with a including results as cautioned Exchange results statements or from such should, draft, results may, filings those and and factors could risk expectations, Commission. to subject projected strategies, may such those statements plans, or future, future uncertainties to are future Forward-looking describe by words, expected, multitude Listeners as are eventually or anticipates,

on statements The were and during and events, speak to as based call statements, date undertake are company which they this forward-looking result date. of the the of any a receipt assumptions of not update of new future does forward-looking All or obligation made any such management’s contained publicly the conference otherwise. whether estimates as occurrence only information, as on of

the With call please Siegel, turn over Executive Ken that Chief let said, Officer. to me proceed. Ken,

Ken Siegel

Great. Thanks, Robert. afternoon, Good everybody.

my third So of at full SenesTech. today’s marks the end month

of a it intended are focus changes defined of long-term During time that success. and that we need and thing made are Most near-term to to do drive number one notably, our to that an we’ve well. idea in significant period our we with do our strategy in more becoming

is easy. As a company scientific rich success, to progress the transition and never commercialization in

every the reasons, has commercialization pursue It the to early potential and has scientific opportunity For historically multiple we created unfortunately across markets had deals. or company the potential multiple haven’t end resources close to focus but tried geographies. and pipelines

is opportunities ContraPest are for that many The exciting part out there there. so

with ourselves That many become markets to we allow additional around or country a more successful order world. need prove success to first narrowly commercial into the geography. expand market defined the in us However, readily more then and in to more will

That brings us to California.

potential company the innovation the ABXXXX represents a and a accelerant from aware, moves disruptive as second in anticoagulant are you the generation fifth in the largest California bans rodenticides economy. of potential many to necessity As adoption potential of ContraPest world’s which for

for has SenesTech months, been passage Over XXXX. the at the past preparing team of potential the few

of We customer build have XXXX’s outreach expanded and significantly we ahead into this awareness our market as contacts implementation.

well our as inbound increase an direct selling seen activity also in as efforts. to responsiveness We’ve

process in We California alone. of value market the overall the the determining of still are

in million that to be is point than yet generate How XXX rodenticides as is sales much sales overall and seen this at estimate can fast addressable best the how currently more we of though. Our market. an it represents

and handle We’re augmenting demand. to testing are to our also systems robust make sure anticipated the they enough

ability demand are our launching in for forecast sales effort sufficient manufacture confident future, are able requirements. to drive to better we into next foreseeable handle quarters to this product incentive to be attempt we to as future the an Although some programs to

such to sure being reviewed counties, rodenticides. shortly agencies find facilities will our state that expectations. backend potential our demand of in and as ContraPest offers SGARs customers’ footfalls All alternatives to have we systems public in viable and customers first-generation on and that the are to lands be need managing with make California Many no municipalities, faced solution.

the of create These a municipalities government we’ve future. three build with near-term the solid and opportunities keeping attack are theme areas to food and sanctuaries, for and and agriculture. platform zoos of identified agencies focus, and In intended

feather agriculture and and in food is reasons Our eggs explain poultry that’s industry, focus a moment. in initially the I’ll for

relatively revenue. in in best a near-term us market, at are given zoos the the locations areas small to that sensitive of believe are These we We robust already inherent have concept. use offer chance of sanctuaries, and mission although highly which poisons and their proof

dispersion, size of testing the use geographic their us. help we a organization to are Given contract and sales

get other us to markets. allow will quickly more is CSO we use on this as quickly plan help us needs street expand our workforce Using Assuming successful, our to feet its change. the will target flex and into a

and the test With in DC. we projects California focusing Los Bay and ran Angeles market already phases program recently are in on promising our additional Municipalities the another and agencies in government seeing in in Louis launch shortly. ABXXXX, have obvious test aggressively in Washington are an area demonstrated in a to expect St. have discussed results we are and program We success target.

ContraPest expand awareness Currently, for we make that know state across that customers once the sure cities a best management user both and We banned. to are to rodenticides. more to is anticoagulants look a agencies in effective looking alternatives government alternative are process ban comprehensive campaign and have professionals end essentially as effective

effectiveness. to on up working are programs and both significantly to training make We employ our assure PMPs that to speed sure are cost ContraPest to how best with results expanding also

is municipalities sure with included their that budget ContraPest and XXXX make working XXXX to We’re cycles. in

We’re sampling also of next ahead adoption drive year’s to doing budget.

target, potentially is feather and industry, most the third exciting most the the lucrative. Our

in and We of major baiting on effectiveness. are working two techniques proofs process concept different have to maximize

its We’re the also working given that be new techniques with will agricultural consumers Again, the available validated. to base significant the role has EPA once so a play to of economy. strong California

we and that’s scale able the the egg has to be use made across poultry advantage believe that across additional and business small large We will industry validated, of players. field a one they’re The country. very up group once of has and been

doesn’t contaminate We’ve product significant this to accumulate chicken poultry through doesn’t the overall in Longer we the have. that greater droppings. ContraPest contributor affect recently nor economics rat will manure that it term, as gains also farming the learned have the Rodenticides attraction. animal is poisons present is can for within believe this of organic industry. in negative adoption in Therefore, a help Rodenticides significant drive further it this fertilizers sensitivity even industry droppings. that the to

rats. of also markets, with chicken grain. The share target to industry many component is enormously future our attractive programs key the feed Grain element of and is common a feather

cereals for are establishing including here, and we foods. industries demonstrate grain-based pad a pet effectiveness packaged food launching As we foods, other storage,

and winning we grain verticals ContraPest simultaneously reduces Since I we’re contaminate geographies. through a though, have we highly across Again make many and droppings grain rat not want within shrinkage, clear believe focused key on combination to staying that will applications. certain

on shiny objects lots of understand we efficient there will that where results. opportunity opportunities we quick have organization an out best and a disciplined are focused the We for however, believe as we there, and stay

of quarter continued reflect we in adjustment are placing focus California discussed and to sales the As we model. the press into the the release, the making are revenues our second results

fourth We’re quarter of cautiously begin particularly PMPs build the third spike goes anticipated distributors ABXXXX the and the into for demand balance effect. to the inventory if quarter, optimistic about after and

from we year. next ABXXXX However, revenue meaningful anticipate until don’t

we rate. make steps resources have our that sufficient next reduce took us into monthly to To bridge to burn year, we sure well

shift science continuing to an also our generational process. are We commerce, from ongoing

to Right to demand of addressing will reinvested savings historic product an achieve company shifted improvement our ContraPest. from to build until for in Part focus sales Future R&D the and these ABXXXX. largely customer R&D commercialize muscle drive we effort we all-out we’ve as prepare on anticipated from on now focus be requirements the revenues. and will sustainable

completed $X.X Also resources, million related a financing to we month. last

As we invested time, that offering. in personally that at announced heavily I

all this have and along pursue expect company strongly you real wanted have sufficient know Between I the and As our believe this to game skin you financing, that strategy. controls to our I cost in with I in you. I we resources might believe

won’t be I you I today. there are questions to know two have answer that So definitively able

is will revenue? First, of are on will I few with second, can’t The two again? the you The months finance meaningful And have sure. when truth only job see that questions, a for to say course, we related.

have breaking into difficult We have industry been has practices ingrained over management not decades, pest if the been given that extremely that learned centuries.

pricing near-term refine narrowed are amount have markets to and a to continue results likely the to significant We and with our strategies key focus that generate sales believe our most we time. be term. an focus this of in the we for That believe which a makes the into multimillion-dollar certainly significant exciting ability to near the California has relatively opportunity company as

our continued and to of support mission shareholders this ability technology your commercial incredible your So in bring to thank success. you, our friends, disruptive confidence for and

results. And over now, it further Tom review to let financial me to turn

Tom Chesterman

Thank you, Ken.

released we only have our and comment. just will As summarize financials, I

filing information should be the our will interest XX-Q additional provide which to We investors. tomorrow, of

XX,XXX, of Ken, stations. address markets EVO our fitting to by impact changing at model by of noted to a Revenues well sales tank revising from California both as format the came Revenues, to JT base were bait reallocation station our our slight over focused quarter. Eaton our in as depressed better increase an resources as prior

But and EVO It a were the is now had field will in JT moving that in as compatible this last replace show to quarter. design the the inventory issue the This right Eaton is were preference. up inventory. replacement as timing of quite to some that we with market that sales EVO returns clear part in coming in sent as is quarter the we

reasonable. Gross due than sales than that XX% incentives. to during and to the better the margin of is was assumption still We production going margin forward quarter due lower lower believe expected

second in slightly came at significantly million, first quarter and last of lower this $X.X lower than the than the of expenses quarter Operating year year.

as to it’s has lead philosophy been, Ken spending be to focus. noted, it If focus, cost, guiding focus, sales approved. lower not or doesn’t Our likely

the was significant non-GAAP $X.X first that measure quarter. Overall, the we of improvement or to million over net per last was performance, second for last EBITDA, assess the quarter use quarter the $X.XX a loss X.X quarter loss and share, Adjusted our a roughly year. million equal operating

million pro We ended X.X forma million when current X.X of cost our we basis financing. our this well XXXX. include necessary the with us on quarter impact a cash in provides structure, with resources With the recent net or into the

A word about financing. our recent

July per the trailing share XX $X.XX As of close on days. XX we’ve a XX% we closed represented for previously The $X.X to gross XX on of announced, or common million. the XX% an pricing offering priced at discount of day’s to July stock and proceeds discount

likes no issue issue the based to stock avoid than comparables of reasonable chose market rather discount, with were one stock we The to overhang. and warrants helped warrants. at on to this recent a lack additional While terms continue route

introduced quality pleased to our the Wainwright H.C. quite of also with We’re investors the us. at bank

the us our As most step to pace to provides especially in mentioned California. above, the fully this resources up opportunities, pursue

organization pace stepping bit pharmaceutical this biotech space To to we up of from the CSO a includes expand have Part sales our expanding or presence. and contract engaged outbound sales sales. a our the learning end,

in-house, quarter Guided fourth marketing for of commercialization productive hope can and first needle and we and they of by weeks a move in to quarter the matter and that next our year. the experts be expect the

last on point pace. One up stepping the

not success. deeper But have rich a sufficiently dive of into each target have progress verticals. history compelling of better we than realize as in commercial quo. scientific of verticals those validation each status we technology works works and The We do the we the and it

is our statement, as for value rats call a than fewer for different different city it, maker. farm each very value market and for The manager. each chicken each marketing friends is a decision vertical, The of

very we building working on work in awareness these we also as a compelling are statements So on value multidisciplinary way. market

to exercises management hear will will Some come and more pest in that’s this Look some past PMPs. field customer on as of implementations future some experience, will from partnering calls. enlightened it with in of or professionals from come going validation of from the our such come about with poultry in project it the this

point. last One

we also these As as ways this we to some step up strategy, monitoring to of some the pace progress promising metrics, our and our investors. provide wanted we pursue in ways

in are like total to unique metrics would and awareness phase, we two As we contacts. the are first the introduce inquiries

a is potential the shown customer are of interest individuals a starting This SenesTech who inquiries in offers. pipeline of solution Total total a relationship. have that point

As In the end awareness of this initial the its number of quarter, jumped campaign hit figure another XXX. in the stride, second the July, XXX. as was California

what this and the we doubled step July, the this to had effort. number are those next for the we you. early ramped ready At keep of this reporting contacts the but tracking It’s up has of XXX. By XXX. rates sales Unique to qualified end to who conversion for progress take end are too will with the conversation number call and quarter, leads, whom was a now full

like Operator, please At so. for this lines point, the questions. up we’d to do open

Operator

Certainly.

We the session. begin now will Instructions]. [Operator question-and-answer

Ellich go today question Craig-Hallum. comes first Our from with Kevin Please ahead.

Kevin Ellich

out for questions. start Thanks guess any It’s to appreciate let’s afternoon. that. taking just information get there. good off my I really the provided, that just Good you Tom, metrics with

in I make heard you by increased jumped Did XXX or up total to sure increase wanted the it right. July Just XXX? you say

Tom Chesterman

XXX. It increased by

Kevin Ellich

a into And fantastic. of have that’s a does convert long it if to don’t this, Okay, sale? qualified how these then either know I inquiries take initial one or lead you but

Tom Chesterman

of Well, Municipals on would At you think that. months, about. metric that you’re enough that’s tracking say sense know even we to part on. I vertical have point, talking is depending take are that give I the of different don’t focused a it we data this we dramatically quarters, the can years.

incentives. has make a On producer decisions the set They different food of other hand, more a much quickly. may

of customers So we I cognizant of into think we’re will which kinds very the need about. data, more that to be when we get exactly talking

Kevin Ellich

call the food, of I the egg. since And give and as us in field talked also you involved feather And sense. about? you bit will Can not? makes talked information guess it, let’s the take? that how EPA. terms that of setting industry mentioned studies they I think or in you��re go approval Okay, concept Are that you to about you just running, in you long to Ken, back the ContraPest tests little this it a Proof poultry of use

Ken Siegel

existing require the is because waiver EPA a some The backwards. work I’ll Kevin, So, involved of testing protocols our from protocols.

key doing ContraPest are What working supportive big bait that and grain rats the doing what of techniques on that for are different final to henhouses. is they accustomed here already the to already is just we’re the we’re what we’re consuming So barns. The attempting clearance it the waiting liquids thing and the for a we’re in way do deploy. to is in are in is we baiting

period no fonts familiar So experimentation no we’re be any that of different to experimenting be using become with We’ll there the period reluctance, in it won’t initial them baiting locations. there’s for deploying need initial so demonstrate like and to with of stations. and the

is the complete And go between to labeling. then and plan the change to EPA to permanent make back we the XX results we’ll the a take in testing. days with So XXX that

early potentially applications So testing take next into EPA will able for in we’ll these continue which the future, the need of clearance that places but we’re for the to to will which some be foreseeable use year.

Kevin Ellich

you’re that poultry And Got you egg you of these talked I henhouses whatever then ContraPest is tests and paid those it. guess at proof while are doing for about, deployed facilities? getting concept and

Ken Siegel

product with working the we’re distributions. be PMP, will PMP Actually that so are. a from We buying

probably the earlier are period distributors inventory bought depleting bookings direct they So year. it year last as will it that time of see before we or still some in a this of be

Kevin Ellich

just thing Got of you. here? educate that chicken talked And for why out you then Ken, that is too, is important used about one you – manure kind chicken jumped to me help us which manure what and can

Ken Siegel

sometimes start and say smile me have we so you Yes, manure, all every cracking it’s chicken start absolutely if up. forgive time fascinating to I to I

eggs One lot selling the it these nitrogen, reason eggs. actually make we is in a is selling of is, very the the they powerful more money is that fertilizer it manure is that chicken manure the poultry do for and learned of of the price high-end so than is when drops, demand particularly farming. things a high farms And natural organic

dirty with rat contaminated of fertilizer the rodenticides. we little get on Sort actually secret organic happened have that in there, if this is is droppings

is believe for now with organic. ContraPest to which for pitch have doesn’t the have by end So we what ability farms we up a going in these the better droppings,

we organic going seeing as mainstream, the The manures conventional into way is, again, other more becomes well. start more making we’re as to their piece and think farming

Kevin Ellich

the it, when then more legislation pushback California Got California just on should things been bad And an anticoagulants want market? the like you hear how It because where the taken some masters okay. stories timing what seen the give pest have – of hearing us expect update generation we California. in of you away you ABXXXX, in can also some out guys second and don’t is I’ve sounds problem of

Ken Siegel

Yes, that. the is right now from a we to couple to front week in The go pieces best case yesterday. is has It so Senate ABXXXX Finance of there a always the of intelligence It funding Senate of Committee Committee in be funding no month. to this needs think then floor pro by go this will later the the state. a we that essentially just Since item. is is any issue requirements, to are to required there have forma

such will to already the a go indicated very pass. pretty he et is is conversations to it of the confidence [indiscernible] then September tactics then it. we it if about significant Governor major on party the down bubonic even cetera. needs by that right the XXth Governor’s the scare paths, went about majority because typhus, and to which pest have It seen and cities, have Actually pass. going is it to you’ve which likely San it’s in We control two that problem And down one industry Francisco. passing expect plague, Democrats different the sign What’s high in lines, rodent going now particularly of LA on the

they’re of interesting is I learned typhus issue getting the not and scare that of by tactics. a we’ve they’re of think lot actually things cats But trying. is rats. the being by that spread the One traction with don’t

a tactic to might they now its Bill put can delay the ability other is see give writers that or trying companies The pest essentially onto effectiveness whether the to they’re which either control the of pay closely. neither fine to it successful, fee but to Current or anticoagulants. they a those wanted likely use we’re if continue paths looking is indicates intelligence at to be obviously

Kevin Ellich

good. help. for Thanks all the Sounds

Operator

I��d to read over like the Robert to turn Blum questions to offline. conference

Robert Blum

portion All to a if will right. Thanks the on reminder like as question, a as take Cole. so and submit. try press for. to you’d questions permit And webcast type you many much, as it into the to box again, can a everyone Ask time We’ll ask Question

if on For portion. return any might would the that call will please additional be to line’s question, press from to we coming X ask a you button those like to the live try and live Star the questions

about come generate The that animal the revenue, Specifically this poultry areas or on? and to about? result bit the it a talked announced pest you’ve remarks, the hospital Was first question internally prepared which sanctuaries, of farms specific on zoos here developed control recently did company how deployment also for plan was generated? company instance, you touched target a the specific is to Has a Ken. and little

Ken Siegel

verticals. on let a bit little me expand So the

live and to As zoos sales we are prepared completely I sanctuaries They’re Day. mentioned contract onboard the for Labor the go bringing in organization. scheduled a remarks,

now in of leads with are of sharing we the have the them area. We process in that all

their training ramp an sales able quickly. We’re they’ll be with personnel very idea that to

with We’re state in the middle the awareness agencies. the and of campaign comprehensive municipalities

effect, you mentioned [ph] is – in One I that’s Keith terms I of into have the forward of within moving having – municipalities amount their even not in might communities have XXXX comes move with conversation pressure the and that from that or rodenticides. California, the a they’ve to away even that things recognized they significant whether was I in that interesting of from

to of getting now one in the area, we’re happen calls. that things started So that inbound

small number to already So for the get the at of orders past we’ve proposals looking and in a Los or particularly major make early we’ve been now we’re invited in Angeles. present week the begun and deployments cities in to so that some

the So that tests fact that to beginning from of internal coming constituencies, the know that that’s XXXX that drive pressure degree. fact coming they their poultry is one to combination own and we to awareness, something our but driven comes own from shiny short-term The have these may combination of with they a enormous other And the and pieces that itself a and that’s generate objects, again by eggs, that we’re efforts looking interesting revenue. being doing. in trying at potential when in somebody bright are stay

box we’re big at example, that For as retail, well. looking

has a So deployed team against a specific it, specific everything strategy.

looks As also what in working Tom remarks, much success mentioned assessing on those his verticals. we’re each of in like very

will on bit will But a it there. And specific talk piece a a different want value, up little you Tom, reduction do we --? from at to little so And to to drive a it’s effectively back can line reduction reduction how complaint-driven, It’s wildlife their And we’re by intangible that loss, not demonstrating are in reduction a is again, grain, back grain of protecting. actually et there and economic their the contamination chickens, about loss they as poultry, and specific them pretty working cetera, a on alternatives. their a it’s do it’s cities actually their with a a sightings-driven, coming sightings, it’s damage have byproducts. it’s to So much municipalities, eliminating sanctuaries, on bottom than in some with more come to zoos to ContraPest very bit in complaints so reduce constituents. how math much they similar the looking The it’s rodents. they the and in protein reduction to to

Tom Chesterman

the year. that a the was drastically study He was for actually that to that servicing time a at PMP a that able successfully. actually hospital on Yes, was prim the was he was his It hospital he deployed case reduce last – traps had. found

standpoint result ContraPest PMP’s from a a a contract so the as contract being profitable of moved And that business deployment. a contract difficult to from relatively

one of why that’s the opposed So as it reasons sure new to deployment. not wanted we as that being to testimonial a if a out make got

Robert Blum

All right.

next here in any came in couple Can different DC? share on of Washington times. updates question a you Our and this success program with the

Ken Siegel

I can.

DC, So indicator out which believed best to Washington the the what original with was essentially consumption the is the success would city measure set program be product. of

We of short in of exception or relatively our with of at been has XX% at gotten XXX% periods the stations, studies level back. the Consumption three, the time. have to all two initial

we’re seeing asked indication them most we’re will want populations that which doing clear they’re the the down. have do So juveniles knocking to What and good now to consumption. what actually we be we count is

before the in now we whether a can we a So number But the the preliminary servicing. weeks whether in installing and week take want rat very have few seeing indication That that consumption will the it and through high past juveniles. we’re over the alleys been to in reduction reduction data another very we’ve least of back. we’re see good at been we activity monitor cameras actually in is has wards

Robert Blum

All right.

was Why so quarter? Tom. high Our during of cost goods next probably the for, here the is question

Tom Chesterman

more will this Yes, we’ll my sales of course to lot a be XX-Q had had there. a that some We I in detail tomorrow, remarks out in and file discounts. incentives bit some touched but just We the reiterate. on

gross which had We low scrap to of can produce confident the an is combined absolute still the all to measureable that But we so those XX% expected margin given on basis be margin. towards impact sales; in a on move than an range. some expected level lower continue although of also we had profit a

Robert Blum

All right.

Our next for seeking there update any is here, approval mice? on question

Ken Siegel

really or at twofold, is XX that now as looking general we’re as various in is is What and sure are the all that focusing the the in one right that get can industry. we on which close Q. poultry use of Mice designation for we to we still states usage making have

has mice to bit of but it’s a something core pursue taken we as backburner the continue a in focusing we’re to So on that would markets, little identify XXXX.

Robert Blum

update on your an revenue level? there breakeven internal Is

Tom Chesterman

expect to Well, mentioned, move able the XX%. about to margins to be breakeven we gross again as I

just X forecast, operating million are million range round like. would ought Our the of expenses as a annum the – what $XX a year. to kind a somewhere numbers, any very That’s That right look that’s in rate very just implies of it using a way on simple be basis. run breakeven per but of now

Robert Blum

right. any well that New York. can that provide? already previous All St. is Do as update The you next with contracts discuss as is, can you here what in were question you DC have negotiated Hawaii, happening Washington Louis? We touched on

Ken Siegel

one? Do want that you take to

Tom Chesterman

Sure.

that so is direct top be have a just product know Louis, so we consider to growing it’s there Going contact Washington lot respect do distributing is sites, was success. the know Hawaii, that deployed mentioned. With We of do on not is St. was PMP distributor in a that press we or of being mind there there. ContraPest We deployment additional that to exactly where DC, relationship there. the a we about now how and deploying do of PMPs order; there. there, and initial kind of successful not successful the

is seeing being and private get there from there. distributors it the on our particularly of mentioned, play. is politics the don’t any California at we set we sector done numbers hard PMPs are there the do that expanding in and moving that there. New been is have We is where different in something elsewhere being business York, again, by evidence anecdotal but has deployed our as through that’s it its Ken mentioned attention, of a deployment, Most we as towards governments contracts is

Robert Blum

in All to your XX right. this states what It is, terms restrictive of accepting you looks now question situation use like less have development? that here capitalize plans label, the are sales our next almost upon

Ken Siegel

Interesting question.

we the going the So sales one PMPs this to vast PMPs. been and has how going-in that are of bulk of be to and assumptions market through

the models, can ContraPest for how assures So on revenue in with is deploy been we have they them. it their a stream working PMPs value long-term way a that

the on the in switch so they and since So to populations come more with dramatically to then rebound for one wait the they knock ContraPest can months which every rodent we’re pieces model bomb and from switch working model historic back model. essentially three down key that that a rodenticides the a is maintenance reduce the and let’s of population

idea the to going get termite essentially you have rodents aren’t that multiyear to is it’s more the some so focused us who it which guarantee back. contracts cetera, come the PMPs et of as And about think control, a if on

So their an really drop. because in service annuity more becomes the levels their stream backend revenue

to future normal because have their not it can the trying works may internalize they is let to I does, revenue this, well think I practice As on PMPs a stream. are back if much as me which product I as charge continue as fall as this

well as is So of they overcharging as shouldn’t be the one them the service. out concerns that’s that for of up getting initially for come ContraPest the mindset

how by the PMPs directly in the non-RUP to the key with they at margin on into instructions really also go doing necessarily here think working not product we’re current the to we start we’re a And is the on pricing users, it is our some markup we have what that of move non-PMP distributors fully are discipline side states is can the and deploy. It’s end the of PMPs. and The within them identified to currently will the now is deployment. we’ve So customers outset at that with piece indicate how XX to couple to alternatives sell introducing corporates. a that that model

are we how process is So in end directly. to got couple now direct deployment non-RUP projects it a in with markets. at of looking deploy users We’ve we

whether it the markets RUP to a using non-RUP. pricing discipline We’re also in it’s way core impose as or

Robert Blum

on the to live additional of back going you I’m to Cole, here. right. All the be that questions for might call turn call the over portion

Operator

Absolutely.

Craig-Hallum. from from Kevin come Please next ahead. Our question Ellich go will

Kevin Ellich

just now wanting the restricted there get rest, seven XX Ken, expect label. up the ups. to have that other use do follow When my states quickly, is taking to said follow for Thanks you guys. states? you removed I Hi, think the

Ken Siegel

are it’s to of though – remove designation Two it the allow of but sell going them essentially them us Two non-RUP. as not to it’s are interesting. to going

we’re up really to XX. So

don’t The other of I five one the know top California. them off them of head is other my than

clearly regardless of So in the there’s at one, quarter looking news at Kevin, we’re most in to first customers is of but pressure end good meantime And year, go on. the whether that as is non-RUP. user ABXXXX, least because acutely focused enormous on that we’re California the shift next California we

Kevin Ellich

Got you.

Okay. year-end Do the get other by you then? think four you’ll states

Ken1

what our in back of particular point is. and regulatory California. of but go see them people I’m this it dribbling I’ll sure. in of not the time, to the of are kind They’re sense the none magnitude

Kevin Ellich

Got you.

of terms give they wondering them? Okay. with the able guess the with any to contract are things information ContraPest percentage in you sanctuaries, or a zoos sell well? just And sales of as exclusive they CSO, they for are other And arrangement to then I could get is what the Do sales? the if force and

Ken Siegel

So dedicated will ContraPest, engaged have exclusive we be will we’ve but our not is only to sales product. selling the company who people that

arrangement so A There of then a the itself of it, is be relatively the their small So people. is pay a balance modest, and salaries low. company are will sales. sales supervisory commissioned on actual significant call is essentially fee the the salaries commission. these the portion we to commission They

lot So commissioned leads. They only which on if we the will stayed away to models sell be the pay based the are of from product. a

Kevin Ellich

you. Got

of And quarter around a burn X then, about this Okay. Tom, million. at think I still looking we million Are makes sense. lot year? X cash the That for

Tom Chesterman

marketing Yes, but as some sales of we said, reduce activities we’ve we where steps the redeployed to can to is that burn activities. being taken rate and

So assumption. is I probably a state think a steady conservative probably

Kevin Ellich

installing I’m you stations Okay. consumption misunderstanding with rats do you it’s ContraPest And to great what is guess what stops installed from when having That’s meant, but think of forgive out it update does that you’re need the if the that’s said use. rate we the all for you Washington what lastly, And high bait there. juveniles. why then was I that do or the exactly Ken, activity and cameras reproducing? I DC cameras see to

Ken Siegel

But about It’s say and to I’m terms one the as seen thinking to able consumed. concept in testimonials, definitively right. and proofs thing creating you’re suspenders. it’s belt It’s we’ve that this a be respects, of of some the being reduction. say In product’s future that thing another to

with go-forward sort go, like on that to a it better is can think I actually the and and vertical population. what take eyes in they’re basis. something squarely hits documented come is clearly no up between okay, says, it sell going that This a matter if is reducing proof, to works this feels way we indicator working. – it it’s rat just that somebody the here is of the consumption the so something But it’s to, I And

Kevin Ellich

And first you you’ve beside how company Were investments the you you what sense. when and the you’ve that big Okay. started? learned say joining negative and the positive three the pros been the months with then equity That cons Ken, to company? expected few makes months would with offering, relative and you have lastly, both now gone since made

Ken Siegel

That’s question. a great

how came figuring to sell it. a it even one, cons money in out than wouldn’t have more the there pros it of way been talent And so than selling better put product enormously a science. day own obviously or challenge creating I So of the I a the to of million team, and said have challenge All have I the of have with impressed the start. strength on in, $X I’m – it’s pros it’s then of the as to are my

we a verticals The that So and which that’s working the all we the concept we’re that is focus. what of positive. need and very talked some in of I we’ve is identified these a on little concerning thing proofs today, various more need stuff is about call on

the down is putting and in we’re likely public, was were that those investors that verticals, shift. pursuing focus going was major company hit go a we’re there things given key the buckle it nearest the were revenue alternatives so to attractive that most going with I many three California these the energy of to to One our saying in the discipline we’re and in to felt fact areas where profile, the revenue the we to owed I term. generate given But

I able it. all that quarter, money together get hopefully right very hit out I tell when I’ll for how address or what wouldn’t the you going I’m have we formula. we’re next was So of that that on we that saw to you in. think we amount we’re laying to again, be And now and is challenge the put optimistic,

Kevin Ellich

again. Thanks you. Got

Ken Siegel

pleasure. Our

Operator

next is question Mr. [ph], Our ahead. from Greg a Sullivan Please Sullivan, line go private open. investor. you’re comes

Unidentified Analyst

Ken, chance sorry. my before you’ve I’m question of to ask. Actually, I job really Hi. answering got good a done even a

Ken Siegel

Terrific.

Robert Blum

you. Thank

Operator

question from investor. go next Lee comes [ph], Our private Please Mike ahead. a

Unidentified Analyst

Good afternoon, gentlemen.

Ken Siegel

Mike. Hi,

Unidentified Analyst

for My user charge the SenesTech that a has all that the the exactly the and end there than is, to listen distributors. it’s will very you’ve in a Mr. It from And the if buy question. – Siegel an one Chesterman have comment information. possibly left. buy users been I my that said you directly lot questions of of was California regard to an only That’s directly to folks to nice speak the end pricing same option up from they from given said question be Of my for distributors? versus in Mr. SenesTech

Ken Siegel

it. So is price is would we suggested it believe is user. is price sometimes the will been from have retail management to companies the What’s an we two our right what essentially one see plan at or suggested now distributors times happening up end and we the pest marking retail been our what otherwise sell

to purchases, here put discounting the key using large been that really allow the will the of in for volume and for our have third parties mainly the discipline integrity product. is pricing markup to but some We pricing

Tom Chesterman

a cost customer I would figure product lot and you buying that incorporating is still out and that remember of different have of considering that into just a have a to add they’re so that was going the one feasibility to are servicing thing that. go and into the there’s to to that. PMPs pieces offering our If that also direct, service

in And so it’s brought be one all or another. going together to

really component. clear it So an because not of apples-to-apples is that as service comparison

Unidentified Analyst

Sure. And more I one question. may if add

was that it in of discount sort asset product month earlier. some us On tried next in July which the of lot month Can went to is as the there give quarter, you who site an month, how looks first or if Web an of which there move listeners in June the the last of indication was promotion a more probably July? and

Tom Chesterman

I for be the on premature next comment quarter. it would think us to

and try that to the going quarter on. remain remain we’re We’re reporting to disciplined

Unidentified Analyst

enough. fair That’s

appreciate Thank Okay. it. much. you very I

Ken Siegel

welcome. You’re

Operator

to like turn I’d to Mr. read to conference the questions. back additional Blum over

Robert Blum

right. All

Just all non-animal SenesTech is, ContraPest looks animal far control species? or maybe and or hogs and in one is more Question like other birth for two along plants, here. wild questions how developing

Tom Chesterman

message. to I new want because got going I’m that we make sure that take knows the Well, to that CEO our

focus, focus, about all are We focus.

were So, Ken, just so we you saying. you know what heard that actually

working not the at other are programs on We those present.

right work for and we on the working products ContraPest have now. are making We sell can

Robert Blum

any that, back I over it With right. will remarks. for All turn closing to Ken

Ken Siegel

incredible and to that put the make that and that focus and time. working thing most are we’re some CEO which months been tell revenue three thanks it’s everybody, on all an the hopefully will you the really how that of sense it of strengths I you as you for which we’re team quite a I a given one Well, what doing is are value spending the exciting the sure inherited I’ve together as will drive is board.

next about few, quarter call how either the we’re hopefully in And certainly the or next success. the and we’ll talking the revenue uptick in be in driving

forward passionate you about this quarter. So again, are you support. to all talking all look And just to we how realize thanks of for hope you I the I next company.

So thanks, again.

Operator

The for presentation. today’s conference attending is you now Thank concluded.

a disconnect this have lines now and may your time You wonderful at day.

SenesTech (SNES) 13 Aug 192019 Q2 Earnings call transcript