Applied UV, Inc.

Good day. I would like to welcome everyone to the Q2 2023 Applied UV Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, John McNamara, Investor Relations for TRA Digital IR. Thank you. You may begin.

Thank you. Good morning, everyone. And once again, welcome to Applied UV's Q2 2023 earnings call. With me on the call this morning today are Max Munn, Founder, CEO, President and Director, and Mike Riccio, Chief Financial Officer. As a reminder, all material for today's presentation are available on the company's investor relations website, at applieduzinc.com. Before we begin, as usual, please take a moment to read the forward-looking statements in our earnings press release. 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 on certain assumptions and expectations on future events that are subject to risks and uncertainty. In our most recent form, 10-K, you'll find some of the most important risk factors that could cause actual results to differ from our predictions. With that, I'll turn the call over to Max Monk. Go ahead, Max.

Thanks, John. Good morning, everyone, and thanks for joining us today. In addition to reviewing the highlights from the second quarter of 2023, we'll spend some time discussing our strategic roadmap, the progress we are achieving across multiple business lines, and the outlook for the second half. I'm pleased to report another strong execution quarter for our business, posting second quarter revenue of $10.8 million, up 83.6% from the comparable period of 2022. Our hospitality segment grew 23.5%, and our disinfection and healthy buildings technology segment grew 227.6%. We continue to benefit from strong underlying trends in our healthy buildings technology segment and from our hospitality segment. Moving on to our backlog, we're pleased to report a record backlog of approximately $20 million as of today, an increase of 279% year over year. The increase in our hospitality segment is particularly noteworthy representing over 59% of our total current backlog. This is a testament to the remarkable work of our employees and an indication of the momentum in our business as we look to the remainder of 2023 and into 2024. Beneath the top line results, we're very focused on our path to profitability and positive cash flow from operations by improving our gross margins. optimizing our operations and carefully managing our expenses while making the necessary investments to ensure we deliver on our commitments to our customers and shareholders. We'll focus today on three key factors to get us where we need to be next year. Scale, gross margin expansion, and the management of operating expenses. We believe growth in both of the operating segments that we're in will play a leading role in transitioning to a positive and profitable cash flow company. As such, scaling any business is challenging, but growth is critical, and we've begun to establish our brands and build a business that we believe is well positioned in the enormous markets we operate in today. Let's start by reviewing our hospitality segment, specifically Munworks, a manufacturer of mirrors and furnishings specifically for the hospitality and multifamily industries. Our hospitality division is experiencing unprecedented growth with leading hotel brand and property developers, underscoring the success of our strategic expansion in manufacturing capacity and our ability to meet the evolving needs of the hospitality and leisure industry. The combination of hospitality case goods with electrified and lighted mirrors has proven to be a winning formula, leading to increased revenue per customer. This integration of product lines has allowed Applied UV to offer comprehensive solutions to its hospitality clients, enhancing customer satisfaction and driving revenue growth. This segment has continued its pre-pandemic growth, fueled by the post-pandemic travel surge, combined with increasing demand from the industry to source products manufactured in the US. There are a number of factors driving this trend, which we believe is largely driven by hospitality buyers seeking to avoid the stiff tariffs and duties on products now manufactured in China, and to reduce the significant risk and supply chain disruption, allowing our furnishings to arrive faster with less quality risk. Although furnishings constitute, on average, only 15% of the cost of building a hotel. You can't open the hotel without the furniture. A good example of the successful experience in this segment was our announcement recently of having received over a $2 million in cash deposits on a significant $4 million order from hotel and multifamily developers for interior furnishings. These new orders or contributed to our growth in backlog, which, as I've said, currently is approximately $20 million. Before I turn the call over to Brian Stern, president of Puro Lighting, to discuss our intelligent buildings technology segment, I will close by reiterating our expectation of total revenues for this calendar year of approximately $45 million. We've had a solid start to the first half of the year, acquiring two new businesses, and we anticipate further positive developments as we fully integrate Puro's technology into our airside platform. Our broad range of FDA-cleared premium air purification products, SAS solutions, and IoT capabilities puts us in the enviable position of being able to deliver best-in-class solutions that meet the evolving needs of our customers. We've recently realized cost and operational and sales synergies from the acquisitions of Puro and LED Supply and have identified additional synergies to be implemented. And we will continue to evaluate costs as we drive toward being cash flow positive. Let me add that in line with our commitment to efficiency and profitability, we've been aggressive with cost reduction activities, including the reduction in the number of employees by over 10% and the payroll expense reduction of even a greater amount, allowing us to significantly improve operating margins and position Applied UV for a trajectory toward cash flow positive results. I would like to note that our financials for Q4 2022 six months ago, and Q1 of 2023 incorporated one-time costs that are essential for all of us to understand. These were primarily related to the rapid drop-off of COVID-related sales as the pandemic quickly receded. This resulted in significant and required write-downs of certain non-cash acquisition costs, as well as one-time costs to pivot from our COVID-related business concentration, all of which is now behind us. Despite these transient expenses, we remain confident in our strategic direction, and we firmly believe that these proactive measures will enhance our market standing and will drive sustainable growth in the near term. So now I'll ask Brian Stern, President of Puro, to jump on.