United-Guardian, Inc. (UG) Earnings Call Transcript & Summary

Good morning. I'm Donna Vigilante, President of United-Guardian, and I hereby call to order the Annual Meeting of the Stockholders of United-Guardian, Inc., which is being held by video conference, this 15th day of May 2024. Andrea Young, Secretary of the corporation is present, pursuant to the bylaws of the corporation will act as Secretary of the meeting.

I present a copy of the notice of this meeting, which has been sent to each stockholder of record together with proof of mailing of such notice. I ask that this notice and the affidavit of mailing be filed in the records of the corporation.

I move that the notice of this meeting together with the affidavit of mailing be filed in the records of the corporation.

I second the motion.

All those in favor of the motion, say yes.

Yes.

All those oppose, say no.

Yes.

Yes.

The motion is carried and the secretary is directed to file the notice and affidavit of mailing with the records of the corporation.

We've a list of stockholders of the corporation as of April 5, 2024, the record date fixed by the Board of Directors for those stockholders entitled to notice of this meeting. This list has been prepared and certified by Continental Stock Transfer & Trust registrar of the corporation. I ask for a motion that the list be filed in the records of the corporation.

I move that the list be filed in the records of the corporation.

I second the motion.

All in favor of the motion, say yes. All oppose, say no.

Yes.

Yes.

The motion is carried and the Secretary is directed to file the list of stockholders with the records of the corporation. I now call for nominations for inspectors of election.

I nominate Andrea Young and Barbara Ricardo to be inspectors of election.

I second the motion.

Are there any further nominations? If not, then I declare nominations closed. All those in favor of the election for Andrea Young and Barbara Ricardo as the inspectors of election, please say yes. All those oppose, say no.

Yes.

Yes.

Andrea Young and Barbara Ricardo have been elected inspectors of election. Will the inspectors please sign the oath of office and turn it into the company at the end of this meeting? The inspector of election has reported that the holders of a total of 3,640,496 shares are present by proxy. A total number of shares present constitutes a quorum and represents 79% of the 4,594,319 shares outstanding. The meeting may now proceed to business. Copies of the company's annual report for fiscal year 2023 have been mailed to all stockholders of record. In view of this fact, I ask for a motion dispensing with the reading of the report and directing the Secretary to file the report with the records of the corporation.

Yes. I move that the reading of the annual report be dispensed with and that it would be filed with the records of the corporation.

I second the motion.

All those in favor for the motion, say yes. All those oppose, say no.

Yes.

Yes.

The motion is carried and the Secretary is directed to file the annual report with the records of the corporation. The next order of business is the election of directors of the corporation for the coming year. I ask for nominations for the office of directors.

I nominate the following as directors of the corporation for the ensuing year: Ken Globus, Lawrence F. Maietta, S. Ari Papoulias, Arthur M. Dresner, Andrew A. Boccone, Catherine Kolinski.

I second the nominations.

Are there any further nominations? I ask for a motion to close the nominations.

I move that the nominations be closed.

I second the motion.

All of those in favor, say yes. All oppose, say no.

Yes.

Yes.

The motion is carried. Proxies contain the following proposals: to elect 6 directors to serve until the next annual meeting to approve; to approve the holding of an advisory vote every 1, 2 or 3 years on the compensation paid to the company's named executive officers; to approve on an advisory basis the actual compensation paid to the company's named executive officers; to ratify the appointment of Grassi & Co., CPAs P.C. who is the independent public accountant of the company for the fiscal year ending December 31, 2024. Since there is no voting taking place at this meeting today, I can report that based on the information provided to the company by Continental Stock Transfer & Trust Company, the company's stock transfer agent, the voting results were as follows. Director, Ken Globus shares for 2,385,320, shares against 374,345, abstentions 6,238, broker non-votes 874,593. Lawrence F. Maietta shares for 2,293,141, shares against 466,229, abstentions 6,533, broker non-votes 874,593. Arthur M. Dresner shares for 2,605,762, votes against 154,014, abstentions 6,127, broker non-votes 874,593. Andrew A. Boccone shares for, 2,656,431, votes against 102,489, abstentions, 6,983, broker non-votes 874,593. Ari Papoulias shares for 2,658,220, against 97,068, abstentions, 10,615, broker non-votes 874,593. Catherine Kolinski shares for 2,718,647, shares against 43,480, abstentions 3,772, broker non-votes 874,593. On the proposal to approve the holding of a vote every 1, 2 or 3 years on an advisory basis on the compensation paid to the company's named executive officers, the proposal to do so every year has passed. The vote totals were for every year, 2,644,983. For every 2 years, 32,358. For every 3 years, 74,272, abstentions 14,290 and broker non-votes 874,593. On the proposal to approve on an advisory basis the actual compensation paid to the company's named executive officers, proposal has passed. The vote totals were for 2,556,806, against 173,892, abstentions 35,205, broker non-votes 874,593. On the proposal to ratify the appointment of Grassi & Co., CPAs P.C. as the company's independent accountants for the fiscal year ending December 31, 2024, the proposal has passed. The vote totals were for 3,607,807, against 16,190 and abstention 16,490. I call for a motion that the votes certification of the inspectors of election be filed with the records of the corporation.

I move that the vote certification of the inspectors of election be filed with the records of the corporation.

I second the motion.

All those in favor, say yes. All oppose, say no.

Yes.

Yes.

The motion is carried. The complete voting results will be posted on our website. I've prepared a short presentation that I'd like to share at this time. I'm going to share my screen. Can everyone see my screen?

Yes.

Yes.

Great. Okay. So for today, I put together an agenda, just to cover a couple of topics, financial results for 2023, financial results for Q1 of 2024, Renacidin update, product pipeline and future forward. For the financial results for 2023 compared to 2022. Sales decreased by 14% in 2023 compared to 2022. The decrease was due primarily to a decrease in our cosmetic ingredient sales. We did see a decrease throughout the chemical industry, where customers were moving to just-in-time ordering patterns and reducing their excess stock. Financial results for fiscal year 2023, 2022 continued. We did increase retained earnings and stockholders equity in 2023 compared to 2022. We also reduced our dividend disbursements in 2023 as a result of changing our dividend declaration practice. Financial results for Q1 2024 compared to Q1 2023. We did see a nice increase in Q1 of 2024. So we're having a strong start to this year. We were up 27%. Our greatest increase came from our cosmetic ingredient sales. We did see a dip in our pharmaceutical sales, which was a result of the temporary shutdown that we experienced from our contract manufacturer at the end of last year. As a continuation of financial results for Q1 2024 compared to Q1 2023, we did continue to increase our retained earnings and stockholders' equity, even though we increased our dividend disbursement in February of this year. We did an analysis of the stock price of Q1 2024 compared to Q1 of 2023. We did see a dip in the stock price in 2023 as it progressed. We're starting to see a rebound in the stock price. As of yesterday, the adjusted close was $9.05. As an update to Renacidin, our supply disruption has ended, and we're again able to help those patients that need Renacidin to live better lives. We received lots of phone calls over the months that we weren't able to provide Renacidin in the quantities that we normally provide. And when we spoke to patients and service providers and caregivers, and those insights provided the real need for Renacidin and the lack of substitutes that exist in the market. So it's something we're -- we know how important this product is. Product pipeline. We've 3 different product categories that we're currently working on new development in. For our sexual wellness ingredients, we've received feedback from customers on the product line and that has sparked some new development ideas. We're currently working on 2 new ingredient concepts. For our cosmetic ingredients, we're working on formulations in both skin care and hair care. And for our medical lubricants, we continue to work with our medical customers on new project concepts. Right now, we've 3 new development projects that we're working on for 3 different customers. Future forward. We're in the final stages of the hiring process for a Director of Marketing, and we're hopeful to complete this process shortly. In terms of contract negotiations, we're still in negotiations with Ashland and hope to finalize a new contract by the end of Q2. Market expansion. We're working with our distributor to expand medical lubricants in Europe with the possibility of expanding to other regions. And for Renacidin, we've a market study planned for later this month, where we'll conduct in-depth interviews with health care providers with the goal of increasing doctor awareness. If anybody has any questions, I'm happy to answer those now.

No questions.

I got -- how do you ask a question?

I'm going to stop my sharing.

Well, you can't just pick up the.....

In the chat.

Where is chat? Right there.

Someone put a question in the chat.

Yes. There is a question in the chat. Are there any plans to do stock buybacks. I think I'll direct that to our Chairman of the Board.

Yes. That's something that we've talked about for many years. And the problem with our stock doing a stock buyback is, it's extremely thinly traded. And to take more of that stock off the market just going to make that situation worse. So that's why we're always considering it, but it's very difficult with our stock because of the amount of the public float.

We've another question to what we attribute the cosmetic revenue in Q1? So we've started to see a shift in the market, where customers have worked through their inventories and now they're continuing to purchase new product. We're working with our distributors very closely to make sure we understand the market and why there are shifts in growth so that we can make sure that, that continues throughout the year. We've another question, what's happening with the brand awareness with Renacidin? All of our -- not -- and hopefully, I'm answering this question correctly, but all of our wholesalers have been informed that Renacidin is now available for them to fulfill orders at the pharmacies. We'll continue to promote Renacidin. So part of this market study is to understand, where there might be barriers and how do we promote the product to doctors so that they've the awareness on our product. The hair care. Like, we're still finalizing some hair care product. We're working on some stability pieces of it. That product hopefully will be able to be sent to distributors shortly, so we can get some feedback to see if there's any additional modifications they'd like to make. Are you considering alternatives to Ashland? We're looking at all of our distributor partnerships to make sure that they're the best fit for our organization. So we continue to look at our distribution relationships. A question. How is your relationship with Brenntag going? Anything promising coming from their efforts? So this year, we were at in-cosmetics Global, which is a global trade show for cosmetic ingredients and we spoke with Brenntag and they've had really great feedback from our product line. So if they promote the product to 10 customers, 8 out of the 10 customers are interested in the product. We've had a lot of sample requests. So we're hopeful that those sales will start to show up sometime later this year, but their efforts do seem very positive. Any thoughts about the dividend? I'll direct that to our Chairman of the Board.

We'll have a meeting on the dividend. Hopefully, everybody knows we've shifted the time for the dividend, so we've more information at the time we discuss it. Normally, we'd be discussing a dividend right around now, but it's going to be, I believe, in June. So we've more data. So we've shifted the times and then we'll consider whether it's appropriate to issue another dividend or not.

Will my presentation be made available? I was not planning to make it available, but I may be able to -- I've to look through it and make sure that there isn't any information that I wouldn't want to make public, but I don't think so. I think that should be fine. I'll have to get back to you on that. Do you think Renacidin sales will rebound in Q2? We're hopeful that we'll see a rebound in Q2. We did start -- we came off allocation at the end of Q1. So we were able to now fulfill orders in their entirety. It is early in Q2. So I don't know that we're going -- I don't have that information, but we're very hopeful that we'll see a rebound in Q2. How come the annual meeting is only online and not in person? I believe we used to do them in person, but I think from COVID, we stopped, anybody on the Board if they want to correct me if I'm wrong on that?

No, I think definitely started like so many other companies when COVID hit. And I don't know if any of you who are attending now have ever been to one of the in-person meetings before that happened, but we had generally very light attendance. The attendance that we're seeing here online is much better than what we got in person. But we're going to consider for next year the possibility of meeting again in person well as probably an online presence for the meeting.

That looks like the end of the questions.

Yes. I think so. So if there are no other questions and no further business, I'll call for a motion to adjourn.

I move meeting be adjourned.

I second the motion.

All those in favor, say yes. All those oppose, say no.

Yes.

Yes.

The motion is carried and the meeting is adjourned.

Thank you, Donna.

Thanks, Donna.

Thank you.

Thank you.