Callan JMB Inc. (CJMB) Earnings Call Transcript & Summary

Good day, and welcome to the iAccess Alpha Virtual Best Ideas Spring Investment Conference 2025. The next presenting company is Callan JMB. [Operator Instructions] I'd now like to turn the floor over to today's host, Mr. Wayne Williams, CEO and President of Callan JMB. Sir, the floor is yours.

Thank you, Ali. Thank you, everybody, that is able to join. I appreciate you taking the time, and I'm excited to present Callan JMB to you. You can see the slides up in front of you. Our header Earth Approved and Industry Compliant, you'll see this throughout the presentation. Not only are we in the emergency response and preparedness side, but in special packaging, but everything we do, we're cognizant of sustainment, and you'll see that throughout. This is just your standard disclaimer. This slide presentation is out on the S-1. So if you would like, you can dive deeper into it on that portal. The following slide here just shows you some of the senior leadership, of course, myself; Eric Kash, Executive Vice President; and Jeffrey Appleman, who's also on this call. He's our CFO for the company. The following 3 team members here, I'd like to point out the gentleman in the middle, David Croyle, who is our Chief Medical Officer. He's actually my brother-in-law. He and I formed the company way back in 2007. He formed it with an initial investment of $250,000, which is actually the only investment we've ever had with the company. We have no debt. We own everything outright. And the beauty of that is we also have a doctor as part of our team, which is very important when we're meeting with the clinics, hospitals and obviously, the emergency side of the house. It just helps with having that type of expertise as part of our organization. Our mission is to deliver reliability to our customers by anticipating, responding and overcoming the most complex situations with precision and compassion. A lot of buzzwords, but really, if you look at what we do in the special packaging and preparedness and response, there's no set rules. We're always having to adjust and comply to everything outside of the box, no pun intended. I think COVID is still very prevalent in everybody's mind, and nobody was really prepared for that. But you'll see that the areas that we were already in location with and had been working with those organizations for several years, we were very prepared and did quite well in its response. Our company overview, obviously, we went public here just in February. We met our initial goal of $4 a share when it started and then certainly kept going up. We're an integrated logistics company, primarily in the healthcare and preparedness and response is really the public health side of the house. And that is where we've been able to refine and just improve our processes to allow us to take that to other areas like special packaging, both in the pharmaceutical and also in the food sector there. So we're expanding these proven successes with our thermal shipping. And what I mean by that is when we were involved with the COVID response, we were in the state of Texas, the state of Oregon, Florida, Mississippi, Alabama and the City of Chicago. And there is where we were really able to show the successes of moving vaccines and testing platforms that require very stringent controls and temperatures. And we did not lose any product in that type of movement or that control. This is our core solutions. I call these our hot buttons and emergency preparedness and response, that is our long-standing leg to the stool, if you will. We started the company back in 2007. 2009, we were awarded our first contract with the city of Chicago that was in response to the H1N1 outbreak that was occurring back in 2009. From there, we built vaccine management plans where the thermal packaging really had to come into play, and then we do fulfillment. We have clients that actually send us their product. We store it at our strategic sites and our locations, whether it's refrigerated, frozen, minus 80, controlled room temperature and then ship it all over the world based off of their pinpoint distribution requirements. And we couldn't do any of that without the advanced technology, and you'll get an opportunity to see some of that. Our legacy business, and I had mentioned that, which is emergency preparedness and response, this is real sticky money, if you will. We're in place for an emergency to happen. We're kind of like an insurance policy. What we're doing is we're managing critical equipment, critical supplies, vaccines, blood products, things that would be needed for types of emergencies, whether they're a pandemic, hurricane, blizzard, things like that. And that's what we're managing for these locations that were under contract, and we're constantly in that state of readiness. And when that emergency occurs, we're responding to that. So the example I'd like to throw it to everybody is you heard about New York, you heard about Los Angeles, Florida, other areas that were really struggling during COVID, but you didn't hear about Chicago. Chicago, we've been in place since 2009, as I stated. And as soon as COVID happened, we were deploying assets that we were managing for the city. So we were not relying on the federal government to supply us. We had 72 hours or 96 hours worth of those supplies before the federal assets had to come into play. So here is just some long-standing trusted relationships we have. If you see up on the top, these are global organizations like the World Health Organization, NIH, federal assets, some state levels. And then below that are some of the commercial organizations that we support even today and -- but certainly supported really heavily during the emergencies there. So leading up to COVID, in the preparation for a pandemic, we were already shipping products all over the world for some of our customers and basically peace time routine vaccines, veterinarian products and things like that. And so we were able to really refine this during COVID where we not only took the special packaging, but we added all of the technology around it. So we can not only know where the shipment is, but we can physically read the temperature in route, physically look at where the shipper is at. And an example that I shared with everybody is during COVID, state of Texas was the first state to receive the vaccine and it wanted to share some of its capabilities with other states. So we shipped 5 boxes to Maine with the vaccine and everybody from the White House on down was watching this movement. Four of them were delivered just fine. The fifth one said it was out for delivery. But obviously, if the other 4 were there, there was something going on. So everybody was in a panic, and I said, relax, we can see it. We reached to FedEx, told them they needed to deliver the box and they said it was out on the truck for delivery. And we said, no, we can physically see it. It is in the sort facility over by the third base. So we're able to dial down to that level and see what is going on with the packaging and ensure that safe delivery there. So we specialize in temperature control. The difference is we don't make the shippers. We bought the technology from the makers of these shippers. And then we lease that as a fleet. So kind of like a rental car. If you go to Hertz to get a rental car when you're traveling, you can just rent it and when you're done, turn it back in. And you can get different sizes. If you've got the mini van because you've got the family with you or just the sports car because it's just you and your friend, that's the same thing with our lease fleet. We have small, medium and large customers don't have to invest in this type of shippers. They just rent them from us, and it's very efficient and very safe on the product management. So this is the value that the customer gets, obviously, the reliability, product integrity. We pretty much eliminated the loss of products. So like if you look at the GLP-1 industry, everybody hears it on the news about Ozempic and weight loss and diabetes and stuff like that. One of the biggest issues they're having is they're shipping to your home in an inexpensive Styrofoam shipper. And if it sits out there during the day, if you're in Arizona, it's going to bake and potentially be compromised due to the exposure of temperatures outside of the product capabilities. So what we're doing is we're ensuring that integrity, but making it a clean transition because now instead of that person having to figure out how to get rid of that Styrofoam shipper, they just hand it back to the common carrier and it comes back to our reclamation facility. And we prepare it and push it back out for the next use. This slide here gives you an idea of the size of this industry, $44 billion in 2023. And if you look over to the right, the purple area is just the healthcare, which is the space we're in. You'll see the light blue or medium blue, I guess it is, is in the food. That is where we're expanding as we speak because we're taking the same model that we've improved and perfected in health care and moving it into the food space. When I talk about food space, it's not like you're HelloFresh or Blue Apron, it's basically high-end samples that are being sent to grocery stores to high-end restaurants. They're already spending $300 to $400 to send that sample. Now we're sending in a much smaller usable packaging configuration and then that buyer is able to put that right back into the return stream versus trying to figure out how to get rid of those Styrofoam shippers. As I had mentioned, GLP-1 is one of the biggest markets that's growing out there, and there's 2 spaces in there. There's the 503B, which is a pharmacy compounding location shipping to another pharmacy or to a clinic. And then there's the 503 that is the pharmacy compounding shipping directly to a patient. We have the immediate fix for the 503B, which is brick-and-mortar to brick-and-mortar. And then we're working on -- working with the 503As on fixing their solutions for the product. And certainly, with the new administration, they're going to really start pushing this issue to tighten up how you're managing these products to make sure they're safe and effective. And that's what this slide goes into, just dive a little bit more into the 503B space. This is a video -- I'm sorry, this just shows Ship2Q is actually our process that we do for the reusable shipper. It's a trademark that we licensed way back in 2012, where we're actually running our product through a UV technology, inspecting the shippers, replacing any components that no longer meet the specification. And then anything that doesn't meet the specification is repurposed. We are a zero bio footprint company. So we push to give carbon credits to our customers and then also keep everything out of the landfill. That's what makes us a zero bio footprint company. So I'm going to skip this. This is just a short little video, but because of the time constraints, I would highly recommend that you go to callanjmb.com. And you can go to all the videos there. We have over 50 videos that are really short, anywhere from 45 seconds to about 2.5 minutes to just dive into a lot deeper of our different capabilities. One of the key things that I'd mentioned there is the technology portion. So we wrap everything around this. So this Century is a monitoring system that not only can we monitor brick-and-mortar, but we can monitor packaging like I had said what we did with Maine. So dial it all the way down to the level that needs to be to protect the product. So we have mobile vaccine teams in 15 different states, and they're going out with one of our reusable shippers instead of going out with a portable refrigerator or a whole bunch of refrigerants and everything like that. Our packaging is able to maintain that. But what we do is we identify those teams, and we have a command center in our facility in Texas that is watching those teams. In case it's getting a little close to its threshold, we can intervene and reach out to them. That's the level of technology that we've wrapped around our products. So this is another little video that talks about the monitoring. I'd highly encourage you to watch these videos on our website. And then this is just a case study. This is what we're doing in the city of Chicago as we speak right now. We have 2 very large contracts there, one with the public health department and one with the Office of Emergency Management. And as you can see there, we're managing close to 3,000 pallets of medical countermeasures and shelter-in-place countermeasures for the 2 organizations, along with mobile hospitals, stationary generators, ventilators, et cetera. And we have been in place in the city since 2009. These are long-term contracts, so typically 7 years. So the 2 different contracts we're in, one, we're in year -- we're ending year 2 of a 7-year contract. The other one we're in year 5 of a 7-year contract. And we've been successful in rebidding those and staying as the incumbent. This other case study is what we did for the COVID response for Texas. We've been under contract with the state of Texas since 2018 in what's called a contingency contract. So they pay us a maintenance fee to be in a constant state of readiness. And then when there's emergencies, they pay us the labor, the salary, the material costs and everything like that. I'd like to point out on this slide that we traveled basically 1.7 million miles and delivering to roughly 80% of the state of Texas. This is just the financial highlights here real quick. One of the things I want to point out is the ownership, which is myself and my brother-in-law. Prior to us going public, we owned 100% of the company. I had 75% and David had 25%. We basically relinquished about 28% of that. We still own the 71%. So it's -- we're not going anywhere. We're going to watch this company grow tenfold, and that was the reason for just releasing a small amount. As I said at the very beginning, we had no debt. We had $5 million in the bank. We still have about $6 million now between the raise and what we had left over in the bank, and we have positive cash flow coming from our existing contracts. So it's not like we had to go and raise to pay off research or loans or anything like that. It's a passion of mine to protect people. And I saw that during COVID, and I want to take this to the next level. So we're protecting everybody across the board with what we do. And -- so this is just, again, some more of the highlights. We still do business with the Fortune 500 side of the house, the city of Chicago, of course, is one of our big ones. On that fourth bullet down there, BioBridge Global, it's one of our largest -- they're one of the largest blood diagnostic testing centers in the United States. And so we've been managing their fleet of shippers, their lease fleet shippers since 2018, and we are in a growth pattern with them as well. So that was a lot in 18 minutes, and I'm going to move over to the questions here.

So one of the questions that is being asked here is, can you provide some historical revenue numbers? Absolutely. So the way I'd like to present this is before COVID happened, so in 2019, basically, we were growing at a rate of about 13% annually. And so we were about an $11 million to $12 million company in 2019. When COVID happened, all of our response contracts obviously just imploded. So to give you an idea, 2020, 2021 and 2022, take that $10 million to $12 million base money and increase that by $10 million each year. So now that COVID is over, we've gone back to our pre-COVID type of numbers. Now we do have one commercial piece of business that we knowingly put it in a suspension. It was with J&J managing their lease fleet. They went to a global packaging. We helped them test that. And we knew going in when we helped them test that and told them this is the packaging that we recommend that they do for their global approach that we'd have about a 1-year to 18-month pause of doing the reclamation. That is now coming back online. So we'll see those numbers. We should see about $15 million to $17 million this year. Second question, how does Callan JMB differentiate from competitors in emergency logistics and special packaging? That is a great question, and that was constantly asked when I was doing the roadshow and also constantly asked when I'm doing these type of presentations. We really don't have a true competitor. If we take special packaging, there are some very good box-making companies out there. So Cold Chain Technologies, Sonoco ThermoSafe, Pelican, AeroSafe, they all make thermal shippers for what's called the life science sector. We don't make any packaging. We do the reclamation process. And all of those 4 companies I just mentioned, they send customers to us to do reclamation. They sell their boxes. That's the -- where they make their money. So they find customers that want to do a reusable approach, but then they struggle because they don't have somebody that can manage that for them. So J&J was a perfect example. That was given to us because J&J said, "Hey, we cannot manage these shippers. Do you have somebody that can do that?" So it's not a true competitor. We play very nicely in the sandbox. We'll send them customers that want to buy and then have us manage it, and they send folks that have already bought and looking for us to manage their shippers. As for the emergency management side of the house, we are typically reached out to by the big players like the Northrop Grumman, Lockheed Martin, Patheon, Halliburton. They like to subcontract us because of our specialty in time temperature-sensitive product management. And so same type of thing. There's not a true competitor out there, and we've been very fortunate they'll reach to us. We're a service disabled veteran-owned company, also a small business because we're under $50 million. And so they also get credits on RFPs when they do subcontract with us. An additional question here, how does Callan JMB plan to scale its specialty packaging business within the $71 billion market? That is a phenomenal question. Yes. It's a huge market. So because we had to build readiness fleets for Oregon, for Texas, for Chicago, Mississippi, Alabama, et cetera, we already have over 17,000 shippers. And those are always in the readiness capability. But since there's not an emergency going on, we're able to use them because we own them as part of our lease fleet. And then when emergencies do occur, the commercial side of the house slows down or goes into a pause. We are moving the VIP fabrication in-house so we can manage it as our fleet. But because I had said earlier, we play very well with the makers of those shippers, we would lean on them to purchase lease fleets. And we have very good relationships with them to where we can buy and usually spread the payment out so we don't have to pay it right away. Another question that says, what impact does government funding availability have for Callan JMB contract pipeline? Great question. This is being asked prior to us going public because everybody was concerned with the election. The space that we play in, primarily, which is in the public health sector, there's some key funding streams, one is called PFEP, which is public health emergency preparedness. It is what we're under contract with in 4 of the areas that I had mentioned. And those are protected fields. Even if Secretary Kennedy wants to streamline it, he's not going to streamline the physical grant dollars going down to the states or the project areas. He's going to look at senior staff and management up in the D.C. area, in Atlanta, et cetera. The other thing is he's also looking to commercialize some of this capability. I came out of the Strategic National Stockpile. I was the original architect for that program. When I was working there, there was 12 federal employees and about 190 contractors. I was with Northrop Grumman at the time. There's now almost 500 federal employees in that program. So those are the areas that they're looking at. So we do not see any change in the space that we're at with the grant processes for the project areas. So the pipeline is definitely going to stay healthy in the area that we're at. That is all the questions that were asked. I'm just double check to make sure I haven't missed any. I really appreciate the questions that were sent. They were well thought out. I appreciate everybody taking the time. I look forward to follow-ups with all of you that are interested. I'd just like to end this with saying this is a passion of mine and of my brother-in-law. During COVID, we saw how successful we were in the areas that we were supporting. And I took a very hard look at myself and said, I have to take this to the next level. No longer can I be the small family-owned business that is just chipping away one new piece of business annually, and that's why we decided to go public. I wanted to still have control, but I wanted to share the passion with investors and make the investors part of the family. With that, Ali, I can hand it back over to you, sir.

Thank you. Ladies and gentlemen, that concludes Callan JMB's presentation. You may now disconnect. Please consult the conference agenda for the next presenting company.