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spk01: Good morning. My name is Kate, and I will be your conference facilitator today. At this time, I would like to welcome everyone to the Q1 2021 Applied UV Financial Results Conference Call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If you have any comments or questions, you may press star 1 on your phone at any time to join the queue. If your question has been answered and you no longer wish to ask it, please press star 2 to leave the queue. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. Kevin McGrath, Investor Relations for Applied UV. Thank you. You may begin.
spk02: Thank you, Kate, and good morning, everyone. On today's call, we have Q Saeed, Chief Executive Officer of Applied UV, Mike Riccio, CFO of Applied UV, Jim Doyle, COO of Applied UV, and Rhonda Wallen, Vice President of Marketing and Corporate Development for Sterilum, a wholly owned subsidiary of Applied UV. During today's call, we will make certain predictive statements that reflect our current views about future performance and financial results. We base these statements and certain assumptions and expectations on future events that are subject to risks and uncertainties. And with that said, I will now turn the call over to Q Saeed, our Chief Executive Officer.
spk05: Q? Thank you, Kevin. Good morning, everyone, and thanks for joining us. I'm very pleased with our first quarter, and even more so because it's in line with our expectation. Net sales for the three months ended March 31st, 2021 increased 157.1% to approximately 2.3 million, from approximately 1.5 million in the three months ended 2020. Our net sales and financial results For the current period, reflect the impact of the Akita Holdings asset acquisition that we closed on February 8, 2021. Last year, our net sale for Q1 2020 was generated entirely from the company's Munwork subsidiary, which supplies custom-designed mirrors to global luxury hotel chains like Four Seasons, Marriott, and Hyatt. During the first quarter, we saw an improvement in the hospitality industry as the economy showed signs, of a rebound from the pandemic, and as a result, Unmumwork's business revenues are indicating a return to normal operating levels. A net loss for three months ended March 31st, 2021 with approximately $1 million, compared to a net loss of $78,000 in the three months ended March 31st, 2020. The net loss in this past quarter of 2021 was primarily due to an increase in SG&A costs to invest and improve and ramp up future operations. The liquidity remains strong with a cash balance of $8.9 million on March 31st, 2021. Now, I would like to move on to talk about the growth trends we see developing in our markets and some of the sales and operational highlights of the quarter. Our markets are broadly improving and increasing rate of vaccination along with the easing of social restriction provides further support for the global economic recovery. We expect the continuing improvement trend for the Munwork subsidiary and also continued success leveraged by our investment to further our value with critical innovation at Sarah Lewin. New products like Aeroside will help drive a strong year and a positive year over year comparison against 2020 results. We're continuing investment in our major growth initiatives and growing our domestic and international sales capabilities, setting up new distributors in the US and across the world, plus opening and focusing new channels to leverage our position. Our customers are increasingly seeking solutions to better control pathogen spread in the air and on surfaces. We'll be releasing news of some of these new distribution agreements and sales wins in the coming weeks and months. We expect strong growth in the second quarter driven by improving markets and accelerated underlying growth momentum. We expect these trends to continue to deliver and grow in the second half of the year. Our objective was to start this year from a position of strength with a noticeable year-over-year revenue growth to meet demand, and our Q1 shows we clearly achieved this. For looking beyond the pandemic, a long-term position is better than ever in a world where air quality and infection risk awareness has reached new levels. A differentiated value proposition as a product category leader with proven and tested air surface prevention of infection technologies position us uniquely to capture these accelerating growth trends. For 2021 and beyond, our operational priorities will remain consistent around delivering revenue growth, improving margin, and building a skilled, efficient, and profitable company. Moving to some of the highlights of the first quarter, we announced in early February that Applied UV had acquired the assets of Akita Holdings, manufactured the airside system of patented air, purification technologies, and their suite of products and their IPs. The acquisition has been a success and provided us with an instant presence and significant scale and a world-class product in a critical air purification market, and the integration of the business is on track. In fact, today, I'm heading to Atlanta with our team for our first global sales meeting, and we'll bring together the entire sales team and marketing team to ensure we are executing on our plan to grow. Joining us at the meeting will be the newest member of the executive team, Mike Riccio, who's appointed Chief Financial Officer of the company in early April. He happens to be on the call today as well. Mike is a highly accomplished CFO who brings an extensive array of financial experience to Applied QV, including background with global public companies in corporate finance operations and M&A planning and integration. We welcome him to the team. As I believe I mentioned earlier, We're very pleased to see that the sales momentum in the airside business continues to show positive trends sequentially from the fourth quarter of 2020 coming into 2021 and remain excited about the prospects for growth through the remainder of 2021. Based on our current pipeline of commercial and consumer opportunities, the future looks bright. Confirmation of the trends in demand we're seeing for air purification solutions was delivered with our announcement during the first quarter that we've partnered with the Boston Red Sox to install the airside system in Fenway Park and Jet Blue Park with a project valued at approximately $700,000. The airside units are being installed in all play areas, luxury suites, as well as various points of contact in each facility where fans congregate indoors throughout the course of the game. We're excited about opportunities we have underway or in the pipeline for other large public spaces where air purification solutions can help protect the employees who work at these facilities and their visiting customers. EarthSite is a great addition to our product portfolio, and we firmly believe that there are other complementary and adjacent technologies or companies that would enrich and expand our portfolio of health-promoting solutions and open new markets for us. During the first quarter, we continue to make steady progress with our sterilumine disinfectant system product line, which today includes the lumicide ribbon for placement above hard surfaces like sinks and vanities in restrooms, above desks or under TV in hotels and along countertops.
spk00: Also, the lumicide drain
spk05: Pardon me, I was muted for a second there. Also, the lumicide drain we believe is the only device that automatically disinfects the lesser reported by highly contamination risk drain trap as shown by the hospital infection studies. These drains, like our lumicide line, are UL certified and will be in the market in growing volume over the summer and beyond. Our sales team is actively ramping in the summer to generate revenues pursuing opportunities in hospitality, retail, and commercial markets. Finally, we continue to pursue the protection of our intellectual property as of April 7, 2021. Daryl Luhmann owns eight issued patents in the United States, one issued patent in the EU, and one patent in China. We expect our patent portfolio will continue to expand as we develop new applications and add new products. In conclusion, we're very excited about the opportunities underway and in development for our sterile lumen business. We've made important investments in efficacy and continued testing to lead the space with the technical safety attributes of our sterile lumen product portfolio that differentiate us from the competition. We're seeing very incremental growth at Munworth's pre-pandemic levels But more importantly, very positive sales trends and increasing inquiries for both our Sterilum product lines, Aeroside and Lumicide, from abroad to the customers and sectors on a global basis. We believe that Applied UV has a clear strategy and is well positioned to drive revenue, improve on margin, and deliver sustainable value for our shareholders. This concludes my prepared remarks this morning, and I would like to open up the call for questions. Kate, we're not ready for any questions.
spk01: Thank you. Ladies and gentlemen, the floor is now open for questions. If you have any questions or comments, please press star 1 on your phone at this time. We do ask if you are listening via speakerphone to please pick up your handset for optimum sound quality. If your question has been answered and you no longer wish to ask it, you may press star 2 to leave the queue. Hold for just a moment while we poll for questions. And our first question today is coming from Jeffrey Cohen at Leidenberg Thalman. Sir, your line is live.
spk03: Hey, good morning, Q, Mike, James, and Rhonda. How are you? Good, thank you. Good morning, Jeff. How are you? Good. So, firstly, could you tell us the contribution from Airside versus Thalman? the traditional business as far as the net sales for 2021. I know that the acquisition closed in the early part of February.
spk05: But the majority of the contribution was Aeroside because they came in kind of hot. But we haven't actually broke, we don't break it out by product and individual SKU or line. But in terms of contribution, between TheraLumen and MunWorks. Mike, do you want to do your debut and meet Jeff by answering that?
spk04: Sure. Yeah, good morning, Jeff. As Q mentioned in the call, you know, so MunWorks is kind of returning to normal levels, so basically you can see that last year, you know, Q1 results. But, you know, for this year, for the first quarter anyway, most of the contribution is coming from our our our airside product line as we continue to develop the limousine line. So the answer is the if you look probably about I want to say one third of the sales is coming from our side at this point.
spk03: Okay, that's helpful. And then I can look at the core business year over year. That's perfect. Can you talk about, um, airside and the manufacturing and, uh, supplies and transportation and how that's flowing now? I know that there was, uh, perhaps some thoughts on, uh, on issues as far as not being able to acquire enough product a few months ago.
spk05: Yeah, I'll get us started and hand it off to Jim, uh, because we were, I think probably fortunate to close, uh, in the beginning part of the year. We had some time to spend with the team at Akita prior to close and get down to the bomb level for production purposes. So Jim had a chance, and we put in some orders early forecasting for success for the beginning of the year and doing some lead orders. I don't want to steal too much thunder from you, from Jim. Jim, do you want to explain sort of some of your tactics in terms
spk06: in trying to smooth out a bumpy supply chain yes good morning jeff uh yes we uh we this right after the acquisition we quickly placed some purchase orders um part of our working capital plan uh to get product moving we've got two manufacturing facilities in the states and one in china so especially the one in China with all, as you probably know, shipping and port issues. We wanted to get product moving as fast as possible, so we placed orders up front was phase one. Phase two was strengthening the supply chain and the processes around the supply chain so that we would have better and improved visibility from factory to customer, especially our international distributors. We've implemented all that, and we are on a monthly cadence related to supply chain, and we have a decent amount of product coming in-country and going overseas to fulfill our demand. As Q mentioned, the Red Sox was a rather large order, and because of this, we were able to bring that product in faster than Airside would have been able to do on their own.
spk03: Okay, got it. And is that a prelude to other sports team or other venues comparable to what we saw in Boston?
spk06: Currently, we are looking at additional partnerships across the sports and entertainment world. So hopefully we'll have some announcements coming up here soon.
spk03: Yeah, thank you. Okay, got it. And then could you talk about the MUN Works subsidiary specifically? I know you had some previous contracts. that were delayed and there was some talk about them coming back online perhaps during 2021. Can you walk us through what's there now, how the pipeline looks, and how should we be thinking about the cadence and uptake on Munworks through the back half of the year?
spk05: Yeah, so it's interesting to have kind of a standard business as well as the technology business that is very pandemic-related and cleanliness-related. So Munworks Coming into the end of 2020, as we mentioned, was slowing down and hitting a lot of headwinds in terms of orders and financials and an erosion of backlog. But coming into the year, we saw in that business what they call model rooms for hotels as designers. And these larger flags, Marriott, Hyatt, Four Seasons are required to build and create new rooms and new room designs and refurbish and in January and February, the initial meetings were had. But in March, we started starting to March, we started seeing numbers pop back to around where they were in 2019 before the pandemic. So if there's any indication, at least graph-wise, it looks like in the second quarter it has continued to keep that same momentum going, that they are starting to bounce back to generally normal levels of business.
spk03: Okay, got it. And then lastly for me, could you review for us and talk about the Mount Sinai evaluation or if there's any others going on and then talk a little bit about how that relates to Axis and launching in the fall. Thank you.
spk05: Jim, do you want to get closest to Mount Sinai and Axis? I think we're going to go ahead and do that.
spk06: Sure, sure, I can talk about that. In terms of Mount Sinai, we are running a little behind, and that's due to the pandemic load on the hospitals. within the Mount Sinai network that we're using. But we have our units in their centralized shipping facility to be installed by their contractors. So we're going to get back on schedule here shortly. Baseline testing has been completed with our third-party testing lab, just waiting for the installation of our products into the Mount Sinai network. And then in terms of the access, relationship that we continue to work on that relationship. They are running an independent design and development process using our patented technology right now, so that is progressing.
spk03: Okay, perfect. That does it for me. Thanks for taking the questions. Sure.
spk01: Thank you. We have no further questions in the queue at this time. Do you have any closing comments you would like to finish with?
spk05: No, I'm okay. Thank you.
spk01: Thank you. Ladies and gentlemen, this does conclude today's event. You may disconnect your lines at this time, and thank you very much for your participation. Have a good day.
spk06: Thank you. Thank you.
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