Earnings call transcript Q1 2023

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Operator

Good day. I would like to welcome everyone to the Q1 2023 Applied UV Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Brett Maas, Investor Relations from Hayden IR. Thank you.

begin. may You

Brett Maas

Chief again, call. Once Max Applied QX Mike UV's Founder, Thank me welcome on earnings Riccio, and Director; With President are Officer. the XXXX CEO, you. and to Financial call Munn, today

live As on are at the for website available Relations presentation a Investor materials reminder, applieduvinc.com. all today's company's

please moment earnings to begin, release. press the forward-looking we Before read take a our statements in

base our these call, to make and that financial certain current reflect views we'll that and events about today's and During results. risks assumptions statements We statements certain future expectations performance future predictive and on uncertainties. subject are

Our factors lists that XX-K differ some risk actual cause most results to important most recent could predictions. from of Form our the

Max is Munn. Max, With I'll that, the to yours. turn the over floor call

Max Munn

morning, Good Brett. everyone. Thanks,

included Buildings XXXX segment our with revenues $XX.X year million, the our segment Hospitality Healthy Technologies QX growing over financial Disinfection of up prior XXX% Our and quarter, and growing XXX% results XXX%.

related audit manufacturer legal costs. to Disinfection Hospitality fees, the expenses management custom hospitality segment UV operating corporate Healthy segment; Corporate food as preservation, of cannabis, hospitality, a systems commercial, Board of as in disinfecting industry, use governance, executive as expenses, has distribution residential and facilities, and As Buildings and the and public for primarily markets; education Technologies furniture and segment; X municipal pathogen includes and the correctional reportable Applied which segments operating our health the manufacture portable well and reminder, such elimination funders design, specifically for fees, segments: lastly, listing spaces the -- care,

with to hotel placing segment. several continues deeper pre-pandemic facilities the continues post-pandemic need hotels to had strong a fueled to make growth We've surge. by growth on like which demand -- area. tariff orders to Hospitality to for and to margin operators Now, supply of well which as dive we multimillion-dollar sales franchise shortening about delivery rising MunnWorks us and million expansion, manufactured continues mitigating flag. high-profile we to times The improvements industry U.S.-based as China as market for take its well This maintain anticipate review is what travel capital driving in in and growth to XX% heighten the show their be the Hospitality, both as I'd duties, In disruption, spoke our chain manufacturing the much goods QX the of eliminates our goods, call. X.X%

the margin sales to QX expect expansion to year. and into growth and remainder the continue We of this improve

approximately point. backlog sales $XX is this Hospitality million for at segment Our

totaling and $X UV annually, deaths Now discuss billion segment pathogens virus serious over in have least year. let productivity due expects cost Disinfection occur each expected that me the absenteeism. $XXX losses of year lost million than which This will XXX,XXX infections amounts contagious to to the our infection billion and and Healthy to hospital-acquired infection economy X is includes more one market XX X years. U.S. and reach The per The will at from CDC than Buildings X in less Technology patients disinfection business.

form of safe food, is NASA, our lost a security, post-harvest codeveloped position Maximo proven our to XX% lost Dr. fruit approximately oxidation, where for in and Del on which with for equates fruit in Monte, the and high-value the world leaders of demonstrating already in on food working agricultural the global vegetables global billion high-value Food has Airocide such while food is we're -- crops product photocatalytic -- supply grown and UN, Foods and the Cullen, as Chief spoilage line and others. by year impact yield, help that for Whole we life use shelf a the and to Agriculture leadership $XXX with leverage healthy economy spoke people chain. as those of the Our berries in of well Because Dole, is requires recently in solutions are plan extend to which and products. about keep Economist we reduction improving companies, protect as we our technology the PCO loss,

major With is containers' the air centers Canon QX to refrigerated in currently of and that expect purification long-haul this product help underway distribution into would incorporated Virginia, introduce system early expect and and of we we a PCO-based be trucks a year. launch shipping

will cannabis, as logistics, on heavily including in security food which storage invest food wine our company. and company be to improve largest for focus Also air expanding. yield -- growth the centered on quality storage, HVA primary be for post rapidly all will [ph] and to urgency of the systems pandemic improving Our high-value of distribution, -- area within transportation plans facilities, vegetables, with post-harvest and and indoor the the is which improvements will

a which upon of leading Johnson unique Controls a the patented which our announced Lighting and institution conclusion test USHIO and acquisition of to and research QX, will systems. efficacy early QX [ph] of effectiveness Puro with adoption technology Our XXX-nanometer partnership late our of UV drive

LED and segment Buildings to Supply Technologies Co. quarter Healthy attributed reported Disinfection the acquisition Puro $X.X the of Our Lighting for million largely and

business case of projects of by LED We part into selling our enjoying goods Supply. are already Hospitality our the cross-market heart bid

on. of elimination to guest and worth hotel million we There's $X engineered be continue We'll option opportunity. mirrors a both toward an that approximately as confirmation freestanding room furniture. have [ph] into work cross-selling there's to great in fact, pathogen In

backlog sales Supply LED Our is approximately million. $X for

and as between in this pathogen strengthened our results have we further consumers, a businesses can used stated, governments. a further positions calendar by accomplished Applied we of $XX total guidance. view leading the elimination This and in be technology this revenues As UV company, with QX integrated we are And providing for million platform that $XX million. fully forecasting broad year

conferences efforts, Dr. wine infection expert expert renowned Advisory Mount Hospital Mason, who's includes Board Scientific Sinai Dr. leading efforts, the our prevention leading new entire wins from client trade marketing PCO; all industry; national, Cayman an These and Boehringer representing we a the to our which our of As stated and on throughout XXXX, Mark for planned To Bernard continue from for XXXX industry which the the at have paved each -- for from pathogen proven of conferences year. international also shows Q regarding in and industry world. verticals. their eliminatino trade company the way presenting to our shows existing the orders products its combined products efficacy speaking an in leading and of will respective with -- plans support effectiveness pipeline fields return be representing those company increased initiatives, around will with at suite the and those

complete offerings research place, quality our selling users XX With new of distributors and includes sales global manufacturing countries, under plan we and including with of leverage development, in relationships offering we cross-market distribution product a just clinically Southeast with numerous [ph], end to the UV brands, firmly with all opportunities XX to suite in our across indoor backed Siemens now our global that lighting utilizes which have USHIO, with peer potential smart Controls, partnerships [ph] few. dealers LED products. carbon, a leading a oxidation, monitoring and for building air Asia, advanced known reps software name Acuity reps, for group advantage along U.S.-based Brands, strategic and photocatalytic products XX best-in-class and existing XXX-nanometer Johnson With competitive as our public and also activated Canon, UVC over proven market Grainger, both devices,

and fixed run manufacturing production on from owned We this and and complete. Our schedule and first the will a one and more expense a focus cost G&A many by leases subsidiary variable sales. transfer this solely on believe to Financial has Virginia, of U.S.A. scale completed savings is of effectively partnership a manufacturing the Canon with will translate offshore execution into significant of anticipated customers. yield our G&A the production risk with in Canon Services progressing company into to logistics our first wholly of reduction recently Canon allowing removing marketing expense believe

product portfolio in to our that Internet venture. R&D, will Johnson integration one Controls transition entire got of allow which the air the PURONet that entire we've software facility. monitor our throughout It's bridge continuously with Things proposed joint terms will indoor and interested throughout an we've proprietary proven the software finally of quality reasons developed, our In adding to of accelerate us cross

to across our air incorporate software air we machine of line Additionally, a product the invest elimination software systems monitoring our into systems and learning will with us monitoring within plan indoor and to pathogen growing fastest-growing allow markets, AI in which capabilities one offering complete trend. air compete competitively

X expect field. AI the in entire to in quarters of to our heavily We the competitive the to invest product front next drive

of review turn it for results. now Mike? to CFO, further me our Mike Let Riccio, our financial over a

Mike Riccio

as Vision million Brooklyn, organic also $X.X $X.X to XXXX, months $X.X March MunnWorks of and increased $X.X increase of Mark which the of of ended million Max. the for of a net Net York $X.X segment growth in sales X acquisition XX, million for or primarily Hospitality legacy of largely the on which ended business increase; million XXXX. Thanks, our XXXX, compared result the was the of operations contributed sales March X the March months which of represented XX, million, due increase. contributed an attributable strategic increase New of the to This $XX.X the million XXX.X% XX, as to

Co. the million last in months XX% X XX% Puro for our $X.X was from Technology XX, for the higher increased months January or period million primarily Lighting decrease XXXX, the or XXXX. sales to Building compared XX, year. the driven March to as versus XXXX. $X.X profit percent $X.X March same million segment acquisition on XX% to LED of X mix the Healthy sales Disinfection The million sales segment by XX, primarily and Supply $X.X Hospitality to increased ended due of The versus ended Gross XX% from

lower-margin Vision -- have from For year compared total for for process in last The that the XXXX, prior Mark sales acquisition acquired quarter. we quarter asset the accounted XX% substantially been the were of quarter to XX% projects QX that the completed. in of prior Hospitality as

Healthy Additionally, consumer segment QX Airocide inventory as of at in was half our sold our impacted pricing. we margins by onetime Disinfection special Technology lower approximately discounted Building

of Lighting for result Our Technology the acquisitions months Puro $X.X the expenses driven March to of Disinfection $X.X XX, onetime In This as arbitration expansion the with a of legal the months Co. of $X.X March for Healthy was acquisitions Building X These $X.X primarily increased ended SG&A ended $X.X by for expenses the LED Supply increased primarily a accounted XX, as million million million Corporate, X segment of XXXX, increase million increase. and million XXXX. the case. compared

gross that of increase first for of margin months the year-over-year, of recorded XX% months to percentage the profit of a of an charge XXXX. the XX% operating to compared operating the quarter $X.X million XXXX, primarily $X.X gross loss ended as in the year. in X improved last earlier company -- XX, the as XXXX the million incurred for loss The March was decrease to was due $X.X XX, March an The X in loss for explained On percentage to million first of the ended the basis, loss the in million operating and compared XXXX. impairment $X.X quarter operating

$X.X LED fund incurred The XX, the consideration incurred of January Co. make-whole Lighting The stock LED noncash to requirements. change XX decrease Supply of of of expense acquisition Streeterville also contingent of help value and million fund capital borrowings the to $X.X date primarily million loss due a of the in on of company change Capital Pinnacle as working and provision the within related to XXXX. the company the Capital agreement, of compared the acquisitions to and Supply and Co. price the our additional interest because in from fair merger March PURO to market Puro

Puro as ended compared due loss $X.X $X.X the the the XXXX, year a was to of the change Disinfection million of Building recorded $X.X a in of loss of of costs $X.X million the the fair and million $X.X to SG&A of Co. loss ingression X in of months case segment the a expansion arbitration legal value Technology result market Lighting support the onetime quarter. company the for The mainly net a result corporate loss million the net consideration the the on and prior $X.X ended million. months LED expenses acquisition of million noncash The in the incurred contingent of X in Supply increase for and increase Healthy net XX, as March of also

a or $XX total sales Regarding if of Group agreement, the filed available and on X, ATM, needed. liquidity, registration July at-the-market an Form as shelf XXXX, company entered a into million Maxim a of $X with for readily S-X mixed-use funding source million

agent the through company XX, proceeds During the ended shares $XXX,XXX. under of XXX,XXX ATM gross December year approximately sales sold just the XXXX, with

shares March As facility; and expire been this XX, of XXXX, approximately leaves of the ATM have -- for an $X.X July million The of X.XXX million XXXX. million. sold a shelf XX, on additional approximately gross on will registration this balance $X.X proceeds

The also be its for plans a strategy. sufficient that company's commence and filed and the of operations company The needs. our securities company with capital to continued the liquidity has finance our SEC statement offering working to an current will capital public its sources with satisfies registration a amount of believes growth

to closing the back I Max call turn over will Max? now for remarks.

Max Munn

we've I Well, everything. think covered

answers. just since a should there's of go, we maybe and to amount limited think time, questions any I

midterm extremely elimination, have a segment. effective continue addresses both commercial be levers product will say, me portfolio highly demands directly in we that and outlook and of building which Let now also healthy for our segment long-term the ahead. optimistic Hospitality about to pathogen the believe period our we We just all remain strong

for We'll call open everyone, call. the Thanks, now questions. for joining the

Operator

coming question Instructions] Chip with Hutton. is Moore from [Operator first Your EF

Chip Moore

out this got that you I maybe -- you product you're production. a and talked played to of a Maybe could very attacking how sounds some interesting. major food you you've about, if with preservation with that opportunity. It Canon technology. expand Obviously, the think, solutions just the on while Wanted there I newer launch planned your of wonder quite

some details and those... the some more of you on fill of if us leverage in maybe can Just

Max Munn

in parent where the to is Sure. This instructed Tokyo Mike, Canon. Munn. be manufacturing our with We basis. Virginia, Max let in been they'll X an agreement have over a on me that entered square million their question. security take facility invest decade. They variable food have into devices G&A next They by foot heavily a expense company in

NASA feel that's to worldwide, of and All that the this doesn't for driver is our have We this of problem. lack we world. problem climate impacted for that a the Space we much technology the is the which us easy going by the and feel -- of growth technology in energy electricity think on Canon solutions, field the that third of main and for a change, -- addressing only Station, the which It's AUVI company. a that that's be International developed ideal air-disinfecting have is

they this a in degradation of energy. just excessive into is chemical effectively undertake. will device Food, be We've in to And will high-value The particular soon a they which phase especially as which use is trick and testing atmosphere. and a with closed generate monitoring in of its effectively. ethylene of fruit main ethylene to fruit expect We've first very food vegetable remove remove patents Canon at source minimal The such we who PhD retained of go the loop AUVI developed food, ripen, trucks and on degradation. a own accelerates will containers. berries, ethylene. will the ethylene which long-haul jointly as and sea We've file test a through refrigerated ethylene the gone field amount

contracted containers in parking put of facility. to News, We've sea Virginia lot Canon's X the Newport

One ethylene. of device have it in will our remove the to containers

lapse cameras which avocado Both or transmit in standard able blueberries record time-lapsed sea and be time them photography. have see become a degrades them testing will will other The will a of ethylene be or container how overripens device. monitor, without equipment of will to levels. have our container an banana We'll and both continually useless

the of year. introduce this Coast West Exhibition this in International on Food October conference device We early the at expect to

Canon is about it. excited extremely

We not are but is The the indications highly early effective. proven is that are well. as only science

So show. we expect paper to trade release an academic the for

we'll exhibiting expect PCO except It's highly the will trade we effective. with dual system been have expanded -- which There's -- device we Canon presence We've expect to the that the have -- at much We be that say tested. proven. has a is -- The to will our us. not science show. have removal else

all field answered it put confirm the Chip, hope question. to have in us we expect. I've and Now your I what of

Chip Moore

Max, that's of cycle. color sort it think No, very sounds I and answered compelling. you great it sales there Yes. guess, around I

year. it that to is next for to sounds incremental I'm thinking growth I this You'll sure right think introduce want later just way that It the about... about year. to make

Max Munn

and down Whole ethylene. We already degradation. in large Monte units. Del or system our and slows several at Refrigeration ethylene. facilities. Foods Dole, without large is We only remove PCO have the standard the effective highly device doesn't in It remove With is refrigeration, the facilities our the proven refrigeration

it occurs. transit mode where the we degradation in Now the proven most want of

Chip Moore

-- that original sort was Yes, one questions of of was my around my original that.

the the where with does customers facilities. in think, proven a -- value Is that sales value? similar seen side You've on it you they've proposition, those type of your right, accelerate distribution proven the larger that cycle,

Max Munn

Absolutely.

expect quarter We year. in of this orders the fourth take to

Chip Moore

question would Perfect. be Perfect. my then just broadly. other around cross-selling And more

But it, You the seems think concerns of like side, there the talked hospitality how of about some on the success still out the of it laid hospitality had, side? think, any Max, forward. stuff, particularly, on you've on given And strong. I macro some just those some very to initiatives about call going

Max Munn

No.

Asia exacerbates the In and fact, increase the supply the stress to China between only issues. U.S. chain going Southeast and is and

and of goods facilities and case the few one facilities mirrors. supply and resort to with domestic have other large We industry, hotels the resort leisure

PURO team and contractors qualified getting sell signed that XXX,XXX and to as problem I work for concerned, our general of up, currently condos, in mirrors rentals cross-selling is facility. have multifamily MunnWorks the the far agencies not to and sales so between XX the installation contractors we MunnWorks is XX executives slightest. fact, country somewhere electrical In across In in in have electrified to cross-training is now square labor foot right the is sufficient in, the both believe, verticals --

of about order. In million million that fact, orders $X.X we've getting there's been first will $X the be informed

actually sampling. going in the that backlit finished order. We've That vanities mirrors have purchase in residential of buildings. these the go We're be draft a above for will to electrified

a is likely it's most to tops the whether bathroom, without facility Brooklyn or backlit, there addition with vanity has to manufactures condo also stone and In our for Every mirror. bathrooms. have a and rental vanities a a backlit --

agencies, to employees, not as have ownership contractors which the the selling only these directly XX will some as Additionally, be group. many of but to

just and For $XXX,XXX example, to a owned the in Florida. now. South the estate received the is and we this related a real for medicine cabinets right are going high-end by being rental order starting ship is backlit country facility which companies in developed And developer largest into

expect we've in manufactured So yield opportunities will foresee. States of we're for the X in we we that which this year and -- United unique currently in enormous at that product the XXXX got into verticals all least for second half for not use of

XX lead to in I buying political the deal And is on hard delivering our weeks. that will right country. only X.X to shortfall shortage need buyers to if XX with units on. Chip, a expect the meet a there's it but want I've that in water. The which the and country up developers this for not question. of shortfall, to capacity going weeks put domestically. -- because for times in demand to X catching roughly We of buy China that a favor renters have hope time And situation to in multifamily industry for answered development they're there's play to XX in the We're that huge need this and now million

Chip Moore

on Mark. the and it. Mike, that's of great Vision appreciate you I Yes. it margins those you for last for color, Maybe like, just cadence No, lower-margin the sort one Obviously, worked off, there. of Max. sounds projects

I think bit little inventory. you of figured out a

like the and some you more of a But me Canon initiatives. sequential But in improvement Just half QX. help with help... kind anyway, It of ramp. about sounds substantial think back in those margin can

Mike Riccio

said call and behind buys are are we And just move this chunks consumer of will say. happen. that's the because to spot about was our took just those had of This large -- like so I'll X we kind of an quarter projects the product customers. different of advantage that's what Mark These and out what lower-margin norm, Vision of to And us. opportunity it. you our Exactly let's X

back get on we'll going forward. higher to so And the margins

our a of revising As tomorrow. Board fact, just matter we're our for now forecast meeting

yes, liking I'm I improve. so will what and So see; that

Max Munn

Mike, Korea were... give the and Chip South I flavor the to more on some was -- let sales One Those sales. that where X other forgot -- on was. it X me

Mike Riccio

Dubai.

Max Munn

terms end were competition is sales. consumer a for PCO. the of thank and that effective Those we're deemphasizing as of ours the in of products consumer uses sales much There's not Dubai, consequently, that product you. X future which as cheaper, market low for too none on

Our consumer us. give us for make ROI to and give would product viable didn't did. We large determined food market us, that the preservation hospitality consumer and us that investment required for the

So that a to very but we is away market informed pay for margin, filtration Airocide isn't versus PURO would as they product. product product only the an PCO not it a itself vertical are moving because why competitive low-end versus more from lower

invested and we're that management that an prior degradation some XXXX So costs margin to now. in but we caused early in opportunity substantially recover had behind some us

Chip Moore

And market with capital, outsourcing the capital I acquisitions. that. management? Yes. recognizes around one, And and how of Perfect. working Canon Hopefully, then guess. obviously, around inventory some inventories arrangement, feeling up just the Like there just just the you're just last were working

Max Munn

You want that, take to Mike?

Mike Riccio

Yes. Sure.

Chip. -- you're so right, yes So,

that moving the You're the some and impact a of cetera. but of ARR, into business seeing get to et cycle and better acquisitions on then collecting inventory we're the -- now, going

site in us we because increased cycles, the longer our Pinnacle speaking especially discussed segment. an better Max, outlook working And working a capital allows lead you lead that e-mail earlier, -- Hospitality with feeling capital as and I are cross line matter terms were flexibility going did some business while fact, favorable I'm as forward. here about and So time of there with has Bank my

so max And that forward. with expanded flexibility this kind us to going Pinnacle will of facility allow the

as So capital the I'm well. feeling aspect from more comfortable liquidity about working

So want just keep I you to up date. to

Chip Moore

No, Yes. awesome, real time. that's

Mike Riccio

Yes. Yes.

Operator

[Operator I for time. like further appear in closing the any questions remarks. to to would to Instructions] There back Munn this be floor turn queue over now no Max at

Max Munn

I we're any optimistic extremely here, as and recent growth. any we're and I'm have -- cross-selling about the said, Well, opportunities acquisitions of you if the questions. margin

Mike can always or You contact We're myself. available.

Operator

conference Thank you. conclude does This call. today's

lines You have participation. may disconnect phone wonderful this a time at and your your day. Thank you for

Applied UV (AUVIQ) 23 May 232023 Q1 Earnings call transcript