TOMI Environmental Solutions, Inc. (TOMZ) Earnings Call Transcript & Summary

Good day, and welcome to the IAC Alpha Virtual Best Ideas for Investment Conference 2025. The next presenting company is TOMI Environmental Solutions. [Operator Instructions]. I'd now like to turn the floor over to today's host, Dr. Halden Shane, CEO and Chairman of TOMI Environmental Solutions. Over to you.

Thank you, and thank you all for joining our presentation from wherever you are in the world. TOMI, as a product [ of ] SteraMist. We are a leading disinfection decontamination product. Our slogan is innovating for a safer world, and we are certainly doing that. The next slide, you see is a forward-looking statement. I'm sure we've seen many of these. And if you want to take a moment and read it, if not, I will go on to Slide 3. Vision and value proposition. That's where we are. we're faster, we're safer, we're eco-friendly and we're revolutionizing cleaning and disinfection by providing a disruptive, easier and safer way to disinfect. Compared to our competitors, we're much faster, we're safer. There's no residue. The only residue is eco-friendly, oxygen, humidity and our efficacy is broad where we get 6 log and greater pill. Some of our premier clients -- some of our premier clients will demonstrate to you our growing momentum and our sustainable growth. We have an excellent list of clients that are constantly reordering our product and helping with the mission of making sturdiness is standard in the disinfection decontamination space. As you can see, some of them are Pfizer, Merck, Thermo Fisher, Francis Kabi, NIH, USDA, FDA, NASA, et cetera. This shows you how accepted our product is becoming and how useful it is in many verticals, which I will go into in a moment. What is SteraMist? How does it work? SteraMist takes a very low percentage hydrogen peroxide 7.8%. It takes us peroxide and puts it through a cold plasma arc, which was developed by DARPA it alters the structure of the hydrogen peroxide into hydroxratical, which makes it faster, doesn't require wipe, a rinse and it's portable and it creates a contact to viruses, bacteria, other organisms, including recognized types of materials and causes an oxidative burst, which leads to destruction or death of a bacteria, bacteria spore and/or neutralization of the virus. Moving right along, DARPA, who has designed this initially for weaponized anthrax. TOMI acquired the patent rights and expanded the registrations worldwide. Where currently, we have 32 granted patents, over 200-plus trademarks registered in 50 states and over 30 countries. The market opportunity is unbelievable. It's billions of dollars in relationship to the biotechnology market, the food and beverage market, commercial services and health care. And this slide will show you a little bit of breakdown of that market and how many trillions of dollars worldwide over a period of years, you can see that's available to be brought in as potential revenue. Currently, the way the company set up, we have 5 divisions. The first is biotechnology or life sciences. These are the pharmaceuticals or the variants basically laboratories, tissue banks, government, a cold cell and gene therapy food and beverage, anything from manufacturing to packaging, to processing, transportation, grocery stores, meat and poultry vertical farming, honeybee survival which I'll talk to you in a little bit and prepared food. Our commercial services covers everything from hospitality to education, to mass transit aviation any way you can think of a potential use of this product would be covering any vertical that you can really think of. Health care, whether it's in ICU, if it's in just general operating use inside office use for medical devices, nursing homes, EMS, transportation, et cetera. And it's utilized in surface [ decon ] area decontamination, mold remediation, mill remediation crime scene biohazard and the list really does go on. If you look at the advantages of our product as it stands out among the leader in the disinfection decontamination space, you'll see that we get 6-log kill greater. That's the level of sterilization. A rapid kill in some situations in 5 seconds. The material compatibility compared to our competitors, no way, no mixing, there is no residue, which will be really important in relationships to the Food and Drug Administration. Submicron particle, we're able to have a small particle to get around the virus or bacteria and to create the option to burst that basically kills enter neutralizes it. Again, as I stated, broad efficacy, it moves like a gas. So if you're treating a room, you open up a draw. Having it, it will go everywhere and just imagine the gas, and that's where it will go and disinfect or decontaminate. It's very cost effective, and it's daily use for preventive measures is outstanding. The business model involves recurring bit solution. It's a razor/razor blade type model, equipment sales, we install a base, and we have a recurring base. The consumables quarter 1 of 2020, versus quarter 1 of 2024 showed an increase of 40% with a gross margin of about 60% we have an integrated platform and OEM partners. These partnerships have been put in place in the last half of last year 2024. They're helping and building our $21 million integration and build in pipeline, shortening of a sales cycle of our equipment. These partnerships will create the ability to have our products have SteraMist, integrated into things like isolators, sterilizers, catches biosafety cabin, its material transfers, RDSs, et cetera, mostly in the life science and the Varian fields. Why SteraMist? We do it all from start to finish and endless markets, consumable business model and demand their preparedness and emergency is and should always be there. Product overview. We have our SteraPark and our surface unit. They are basically the spray some that are portable, 5 seconds per square feet. We have whole room fogging for advanced fogging for both air and surfaces, these are in the environment system, our new stereos transport for ambulances EMS bus and our MVPs. Also, our custom integration, which is an extreme demand is bogging this enhanced and fully integrated into a room, a building, a system and it involves our serines hybrid custom engineered system for our SteraMist integrated SIS system. We have platform options, whether it be stand-alone for pharmaceutical manufacturing for data centers, supertight, unbelievable applications for this wonderful DARPA created product. This slide here will give you an example of all our units. And not to take up much time, you can pretty much see what they look like and any more details, obviously, we'll be able to answer that later. Razor/Razorblade model, the equipment out there that's basically the razor. The razor blade is a proprietary solution. It comes in 32 ounce, 1 gallon, 5-gallon, 55-gallon drums. It gives us our highest margin. We've had a 40% growth in the first 6 months of 2025 compared to that same period of '24 previously mentioned that. From concept to commission, designed in-house, deployed services, qualification and validation, we offer 24/7 service for outbreak response and ongoing contracts. Custom integration, we started out with the concept back in 2021. We started to go ahead and create a few of these the -- we closed the pitching in '23. It takes sometimes years to get together with the architects, the engineers and the building owners to go ahead and create the model to build it as it gets in there. As you can see in '24, we launched our SIS, and now you can see that in '24 compared to '25, we already have as many in, as we did in 2024 that are ready to be installed. Our current pipeline is $15 million of open produces with 7 million in active specific designs happening at this moment. The life science market, they're shifting away from ethylene oxide, ETO. This is going to open up a huge market for us. BSL 4s and 3s are expanding. There was a lot of capital restraints early part of this year and the last part of last year. We're finding now that these restraints are being lifted and the market itself is interested in our product. And there's a high containment labs, especially in North America, Europe and Asia. That's showing that these labs post COVID are ready to go into new equipment, and we're there to fill their needs. an EMA compliance, USP 797 as guidelines. As a case study is Philips, the medical market is about $27 billion in 2024. Our goal, once again, our goal is to go ahead and use the data coming out of Philips for an FDA Class II medical device for recycling it, disinfecting it, repacking it, replacing manual wiping going into automated stereo systems partnershipping with many people, including ESCO and enclosure since the last part of '24 and the complete of the Philips project and their continued usage and data collection list with our FDA 510(k) submission. This is very. The food safety market is also huge as it's restricting the use of ethylene oxide going to safer, eco-friendly products similar to SteraMist. Couple of case studies, Nestle using this currently, I believe, in 4 of their foodies in Arizona, in Germany, Switzerland, South Africa. We have many more we're expanding into. Egg Life is another case study that we're using where they purchased a number of them to date. They have a 456% increase in sales. Health care industry can be challenging. COVID really knock them out. Nobody is that interested in new infectious control products. However, we have quite a few health care facilities using our product. And once we're able to handle some capital restraints and hire various people in this industry, we feel we will be back and be a leader in it. But we have some studies where C. diff affects 0.5 million people. Annually, and 30,000 of them will die. And we do have an EPA registration. Moving rapidly along to Slide 23, Trinity Health, St. Francis, did a case study. It showed basically that the total facility C. diff cases when we began the study was in the teens and after they use it, it was a single case, very impressive. It shortens the amount of time to do a terminal clean in a facility, and we have other studies to show that. Commercial industry, our PR certified. This is a teaching it's biohazards, environmental remediation and other professional remediators. It's ongoing I recommend anyone out there in the biohazard remediation field or emergency preparedness, take our product, make it one of the only Tools and it's tool chest. And this industry is going to be in the forefront and the lead to helping in preparedness and advancement of outbreaks, whether endemic or pandemic or just a localized outbreak? Revenue growth, as you can see, over pre-COVID levels were at plus 38%. David, do you want to spend a couple of minutes on this.

Yes, absolutely. I think the key to remember is we are a disruptive technology with long lead times. And so we have a lumpy revenue and we're subscale. But if you look at our -- just so everyone is aware that the blue boxes, as I call that, is pre-COVID. So exclude the COVID here. And then the orange or the brown -- orange brown box is after, and you can see that we went from 5.6% to 7.8%, which is 38%. But impressively, we've grown both within the product revenue and the service revenue. Back to you, Doug.

So also the fact it's some really important or Tier 1 customers of our disruptive technology and long lead times. Currently, our pipeline with our integrated mobile and our service is around $21 million. Service and support expansion. As you can see, we have growth in all those areas, specifically our IHP service. It accounts for 70% to 90% of total service revenue. Annually, it's about 1.3 of 1.7 in 2024. And to date, we have support services and 203,000 versus only 105,000 in 2024. So overall stability in our services have gone from $897,000 in 2017 to 1.7 million in 2024 and increasing in 2025. And Sustainable growth drivers, our pipeline year-over-year, sometimes it's seasonal. We're able now to get past our 18 Months, focused expanded product lines and services to address new applications of our technology, accelerating momentum we're seeing across all areas. And IP has key traction scaling in key markets. We have a clear road map to capitalize on market opportunities. We're executing now with people, increasing our sales team enhancing our KOL network, technically improving our service, expanding our R&D protocols to existing members and clients we're training people. We're improving in our regulatory and an increase in our social marketing, our public relations and expansion in press releases, as we can see with the participation in little seminar here. Our growth drivers and pipeline, again, I'll go over a pipeline $21 million, active design, $7 million for '26 and '27 already. Near term, $5 million and '25, and year-to-date, we've booked about $5 million Return on investment, you can see with about a $12 million breakeven. Gross margins, very nice 62%. Our net income, as you can see, with $12 million is about 2%. Our net income with $18 million is about is about $3.2 million, 18%. Benefits is this razor/razor blade model. Last slide is increased probability of an outbreak endemic or a pandemic, and you can repaper all over the world. journals, and you'll see that there's a potential impact of economic loss, disruption of global travel and regulatory damages. There's a tenfold increase, at least one of these 13 infectious diseases could end up in a predemic. There's 44 countries right now around the world that are experienced issues. And some of these are MERS, SARS, Ebola, COVID, influenza, Glass of Fever, Middle East and respiratory resistant TB metals. And invasive bacterial infections. So again, with extreme after cations in our capital, we can go ahead and start covering many of these countries that are experiencing these issues even today. We are focused also in the future on space travel, on servers, AI, we are the answer. SteraMist is the future of disinfecting and decontaminating space all over the world and in all verticals. And I thank you, and we shall look for any questions. So one of the questions is service revenue grew 30% year-over-year. How repeatable is this growth? And what industry driving the most traction. So the most traction we serve in our in-house service revenue. would be in the life sciences, in the pharmaceutical space. They will have to have a disinfection decontamination process every 6 months, depending upon what country they're in and our revenue should continue to grow year-over-year. And I think that's going to be one of the hallmarks of our analogy going forward as we keep on signing contracts for service revenue $15 million in opportunities, $7 million high priority. What gives you confidence. On conversion time and win rates. Well, majority of these, we've already won, we're in the middle of doing quotes and it takes years sometimes for them to go ahead and accept while we work with their architects and their engineers in designing this technology. So we have a lot of confidence in the conversion of this at this moment. There's another question up here about the efficacy of your system at decontaminate and measles exposed facility. Your ability to ramp up production. We are able to use our backpack, and we can ramp up production pretty quick with that. Of course, depending upon the amount would be capital dependent upon how much we have to meet a large, large need. Let's refresh this. So some of the really exciting areas we're working on and current projects, I think, is if you take nothing away from this, Think about this. Recently, after we reviewed the U.S. Food and Drug Administration's final rule that they published September 3, which was 90FR42535, and I'm reading this, amending 21 CFR to broaden the produce the hydrogen peroxide as a secondary direct food additive. This was a stumbling block we had until they did this. So now this is going to be opening up the food market and food production because we don't have any trace residues and we will be able to start doing more work in the verticals as food safety, packaging, transportation, storage, packaging, free and post-service indoor vertical growers, including cannabis. Another great opportunity we have. We all know how important any these are to look and that the colon is under attack worldwide from the night, which is the most danger damaging on EV tests in the world. The mic leads the destruction of the colony, destroys the body of the bee and weakens it. We have some studies. This is going to be a very pronounced economic impact if it's not treated by the bee keeping industry around the world. We can treat the hive and the bees and avoid damage to the hive by destroying the might with series. Another thing to think about is the global medical device market. I gave you a case study on Philips it's $23.78 billion in last year in '24. And it grows at a CAGR of about 10%. We're currently working with Philips, helping them recycle heart monitors the disinfection with a SteraMist allows repacking them so they can be sent to other patients. It will replace the manual wiping by using an automated serious system, the completion of their project and the continued usage with data collection will assist with us filing our FDA 510(k) submission, which we are extremely excited about, and it's going to open up many avenues and lots of revenue to our growing company. And with that, I would thank you all for listening.

Thank you very much. That does conclude TOMI Environmental Solutions presentation. You may now disconnect. Please consult the conference agenda for the next presenting company.