Release Date: October 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- TOMI Environmental Solutions Inc (TOMZ, Financial) achieved its second consecutive profitable quarter in 2024, reflecting higher revenue and improved gross margins.
- The company reported a 73% increase in revenue compared to the third quarter of the previous year, driven by strong demand for mobile equipment and IHP service revenue.
- International sales grew by 82% in the first nine months of 2024 compared to 2023, indicating strong global market penetration.
- TOMZ secured new strategic agreements and partnerships, expanding its customer base with key clients such as Pfizer and Thermo Fisher Scientific.
- The company achieved positive cash flow this quarter, supported by stronger accounts receivable turnover and disciplined management of expenditures.
Negative Points
- The company faces challenges in maintaining and expanding its trade show presence, opting to reallocate resources towards more effective lead generation strategies.
- There is uncertainty regarding the repeatability and growth of IHP recurring revenues, with some contracts dependent on client production schedules.
- The food safety market, while promising, has not yet reached the revenue levels of other markets, despite significant growth since 2021.
- TOMZ's inventory levels include a mix of equipment and solution products, with a focus on finished goods, which may impact cash flow and storage costs.
- The company faces challenges in obtaining customer endorsements and publicizing partnerships due to client confidentiality preferences, potentially limiting marketing opportunities.
Q & A Highlights
Q: Can you provide more details on the visibility and repeatability of the IHP recurring revenues?
A: Unidentified_5: The $600,000 projected is for our custom engineered systems. The installations at Merck will be a game changer, starting fresh next year. The frequency of use varies based on the partner's business model, such as production line changes.
Q: What is the outlook for the food safety industry in 2025 regarding your products?
A: Unidentified_3: We are excited about the industry, with significant growth in the ready-to-eat food market. We are engaging with organizations like the FDA and USDA and believe this will be a huge industry for our product.
Q: Should we expect sequential revenue increases in the fourth quarter?
A: Unidentified_3: It's hard to tell, but we are hoping to achieve over $10 million for the year.
Q: What are the terms for accounts receivable, and how is the recovery process?
A: Unidentified_4: Most customers are net 30 for regular orders, while custom engineered systems have four payments as projects progress.
Q: How are you increasing awareness and educating potential customers about your products?
A: Unidentified_3: We are focusing on lower-hanging fruit and believe the food market processing will be significant. We are advertising and conducting studies to support this.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
