United States Antimony Corporation (UAMY) Earnings Call Transcript & Summary

Thank you, everybody, and glad to have you on this call where we'll go over the financial and operational results for our second quarter and the 6 months ended. As you're all aware, we put our numbers out this morning. With me here today are Rick Isaak, our Chief Financial Officer; Joe Bardswich, our co-CEO and a Board member; and Jonathan Miller, a new face — he's our Vice President, Investor Relations and also Global Sales Director. Each of those 3 gentlemen will have a chance to speak, since I'll be turning different parts of the call over to them. Let me give you a quick look at the financial results. I don't want to steal Rick's thunder. He's got much more detail to share. To sum it up, though, revenues for this period were up 26%. Cost of sales went up only 6%, and as a result, gross profit was up 122%. That allowed us to report net income from operations — continuing operations — of $30,000. Operating expenses for the first 6 months of 2024 came in at $2.2 million, which is an increase of $1.1 million compared to 2023. This company is still what I would call a turnaround story. Many more changes are on the way. We're — we'll talk about some of those today across the different divisions, but it's encouraging for us to see the operational changes that have now driven the changes in the financial statements shown in our reported income statement today; so let's have Rick take us through more detail on the financial results and what happened in the second quarter and 6 months ended June 30. Rick?

Thanks, Gary. Let me walk through our consolidated results first, followed by several metrics for each of our businesses, and then some key areas around our balance sheet and cash flow. So I'll begin with the consolidated results from our continuing operations. For the first 6 months of this year, sales came in at $5.6 million, which, as Gary noted, represents a 26% rise versus last year. That gain was mainly tied to greater volume in our antimony sales along with a higher price for our zeolite sales. Gross profit, as Gary mentioned, reached $1.7 million for the first 6 months of this year, up 122% from last year. That improvement largely stemmed from better efficiencies accompanying the higher volume in our antimony business, partly offset by additional repairs, maintenance and other related costs in our zeolite business, and I'll discuss both of those a bit more later. Operating expenses totaled $2 million for the first 6 months of 2024, which is $1.1 million more than 2023. That increase was mostly attributable to roughly $300,000 of noncash stock compensation expense, $310,000 of project costs, $360,000 of salary and Board fee expenses, and $130,000 of 10-K and 10-Q costs incurred earlier this year since we filed on time with the SEC. The $310,000 in project costs forms part of our growth and improvement strategy for the company. Several of these projects can't be discussed right now. One we can talk about is the mineral resource study being conducted on our zeolite business in Idaho, which we expect to finish this year. Now let's turn to several metrics for each of our businesses. Starting with our antimony business. Sales from our antimony business for the first 6 months of this year rose by 36% versus the prior year, and gross margin was more than 2x last year's gross margin. The gross margins we're realizing this year are higher because of efficiencies tied to the higher volume; we've seen even higher gross margins with higher volume previously, but the increments get smaller at these levels. Our average antimony sales price per pound for the first 6 months of this year was $4.65, which mostly relates to antimony oxide sales. A couple of factors make this average price look low relative to the antimony market price over the last year. This year, we processed some customer owned ore in the antimony trisulfide, which brought down our average sales price per pound relative to the market price and relative to last year. Also, the current antimony metal market price is around $10.54 per pound. Yet, on a daily basis, this market price exceeded $6 per pound in early May 2024, and more of our second quarter sales were ordered before May, which is when we lock in the sales price. And every one of our second quarter sales was ordered before June. What matters here is that higher volume translated into both greater gross profit and a better gross margin versus a year ago. Now to our zeolite operation. Revenue from zeolite during this year's first 6 months rose 26% compared with the same period a year earlier. Gross profit came in $397,000 lower than a year ago, and the operating loss widened by roughly $540,000; that said, a larger share of the operating loss landed in the first quarter of 2024, so we've been improving as the year has gone on. At BRZ, the operating loss was $432,000 in the first quarter of 2024 and $148,000 in the second quarter of 2024. That bigger first-quarter loss stemmed mainly from higher repairs, maintenance and other related costs, along with fixing up the older equipment we're stuck with, combined with weaker sales. Now for our subsidiary in Mexico. As we've mentioned on earlier earnings calls, we shut down and discontinued our Mexican operations on March 11, 2024. Over this year's first 6 months, we sold off the bulk of the antimony inventory we held in Mexico, bringing in $1.1 million of revenue. Even so, despite those stronger sales and the shutdown, our discontinued Mexican operations still produced a loss of $150,000 across this year's first 6 months. Now let's move to a few balance sheet and cash flow items. Inventory stood lower on June 30, 2024 than at the close of 2023, driven mostly by our antimony inventory. Our principal antimony supplier had some planned downtime near the end of the second quarter. They're shipping ore once more, though, and we're working to satisfy demand and build our inventory back up. We're also hunting for additional sources of antimony ore so we can expand sales and keep a healthier stock of inventory on hand. Receivables were higher on June 30, 2024 than at the close of 2023, again mostly tied to our antimony business; we shipped a great deal of product late in the second quarter of 2024, and every one of those receivables has since been collected. Cash and cash equivalents on June 30, 2024 totaled $12.4 million, up $492,000 from December 31, 2023. Your management team and the employees of our great company work every day to grow and improve the business. A little more than 7 months ago, we wrapped up 2023 and reported a large net loss for 2023, which included operations that have since been discontinued; in 2024, we posted a modest amount of income from the continuing operations. We're not declaring a victory. Plenty of work remains. But it demonstrates a team devoted to turning the company around and delivering improvements through profitable growth. I'll hand it back to you, Gary.

Thanks, Rick. That means a lot. For the next few minutes, I want to discuss zeolite. After that, I'll hand things over to Joe Bardswich, who will cover antimony, and then the latter portion of the call goes to Jonathan Miller. So, zeolite. At Bear River, that's been a major area of emphasis for us. When I came on board with this company 1.5 years ago, I'd heard about the mine, I'd heard about operational troubles, and I'd heard about the difficulties we were facing with regulators and so forth, and it became very clear that perhaps a different mindset was needed, along with new management. A VP and General Manager came aboard at the start of this year, and from that addition came a new plant supervisor. That individual, in turn, recruited a new office manager. So at this point, the three highest-ranking roles at Bear River are all filled by newcomers — some arriving just months ago, others since January. We saw what was shifting and understood that investment was required to address the problems in place. Also worth remembering is how accounting standards work — any mechanical adjustments we undertake must be expensed. Only when we purchase a new piece of equipment might there be an opportunity to capitalize it. Throughout the turnaround at this processing site, we've been performing repairs in every area. Looking at Q2 2024 versus Q1 2024, capital expenditure went up by $450,000. Capital spending amounted to only $51,000 in the first quarter, whereas we spent $501,000 in the second quarter — obvious proof that we're putting money in to get this operation running at peak performance. Because of that, we reached 94.3% run time, which in my view is a first for this company. We also worked through our sales backlog and now inventory is increasing. To give a little context: Bear River's zeolite sales came to just 2,350 tons during the first quarter of 2024. During Q2, our volume reached 3,746 tons, representing a 59% increase. Revenue climbed 64%, coming in at $603,994. Also, as I noted earlier, capital expenditures rose substantially, hitting just under $0.5 million. So what's driving this? Our backlog is no longer an issue. When Q1 ended, customer order deliveries were roughly 7 weeks behind schedule. By the time Q2 closed, that gap had shrunk to 2 to 3 days, and we began accumulating inventory. Currently, there is 0 backlog, and inventory keeps growing. So what's the takeaway? It means we now need to focus on generating new sales. So despite having Jonathan join us and bringing Melissa into corporate development, we've gotten additional support from Jeff Fink, who manages our plant. We're still figuring out the next step: okay, we know who our buyers are — so what now? That's the reason we announced CattleMax, which is our latest offering, and why we've been attending cattle trade shows. Idaho is done. We've also completed Oklahoma, and San Antonio is up next on the schedule. Discussions remain ongoing with several universities regarding their cattle operations and the possibility of testing zeolite with those animals, things along those lines. There's not a shred of doubt in our minds that demand for our product would climb sharply if ordinary consumers genuinely grasped what zeolite can do. That's one factor — well, one among several — behind our decision to engage a Washington-based lobbying outfit, which started working on our behalf on July 1. About two weeks ago, Melissa Pagen and I spent two and a half days walking around D.C., and my rough guess is that we held maybe 12 or 14 meetings. Not a single individual — no member of the House, no congressman, no chief of staff, no secretary, no one at all — knew anything about zeolite. So we provided them with an education, walking through every property zeolite possesses and the reasons the U.S. The government should be keeping reserves of it, since it's an incredible resource for radioactive waste remediation. At each of the three big nuclear waste locations — Chernobyl, Three Mile Island, and the Japanese one whose name I always butcher, I can't recall it, but the Japan incident — zeolite was utilized. It matters a lot that the U.S. government operates numerous nuclear submarines and nuclear power facilities. Plus the EPA keeps introducing various new rules regarding this. That covers Area #1. As for Area #2, that's water treatment and cleanup. For that purpose, zeolite is an outstanding mineral, and the U.S. government deals with many water treatment challenges. So our lobbying group is laying the groundwork. The reason it's been effective is that I'm headed to Idaho on Monday. I'll be spending the bulk of next week up there, and the truth is we're hosting some congressmen at our zeolite operation at Bear River. These are representatives from Idaho, specifically. So ultimately, what it comes down to, above all, is getting people informed about why zeolite deserves their attention and what an enormous asset it represents; we feel very good about things, and we're now meaningfully growing our business there thanks to those test holes we drilled roughly 90 days back, which demonstrated that our zeolite resource is extraordinary. And when it comes to the quality of that zeolite, it far surpasses anything our competitors have. Our competitive analysis has been extremely thorough, which is how we know this. So when reserves are in place, quality is there, and delivery capability exists, selling becomes much easier. That matters a great deal, since in the past this company missed its deadlines and failed to hit delivery dates. As a result, we forfeited substantial business, particularly with large retailers such as Costco, Home Depot, and Lowe's—those chains simply won't place orders if you lack the ability to deliver. So now, given that we have a clear picture of our reserves—and per Rick, that reserve report is currently being prepared—it will be in our hands before this year ends. In fact, a mining company is obligated to produce one. I'm not sure how we managed to avoid it for all these years, but somehow we did, and now it's finally happening. So now that we understand the reserves are there, that we've got the high quality, and that we've got the ability to multiply production by 4, clearly capital is needed for that. So as we become a far leaner operation, with extremely efficient run times, and resolve each of our regulatory problems related to dust control, we'll feel at ease putting more capital to work and taking—adding an additional line, bringing in other equipment. Looking ahead to next week, we've got additional meetings lined up in Idaho. A couple of the agenda items concern products that aren't on the market yet because they're still being developed. A press release came out earlier this year about Pete Bunger joining us. Wait, I should fix that—he's our Technical Advisory Director, not a Board member. Zeolites are something Pete understands completely; he's spent his whole career in that area, and his own company is highly profitable. In fact, he's our largest customer. He's come up with some new products, and we're pursuing patents on those. We're also introducing offerings unlike anything anyone has seen before. The zeolite space is truly exciting. Given what we've learned about how much we have and how good it is, we feel very confident putting money into it. That's why we're pushing on the policy front, why we're working to bring out new offerings, show up at industry expos, and take whatever other steps are needed. Bottom line: as long as the purchase orders come in, we can actually fulfill them today—something this company could never claim before. Joe, let's move on to antimony.

All right. So we are definitely aware that there's a shortage of antimony across the globe, and we're pursuing a number of actions to strengthen where we stand. The person who leads our antimony division, President John Gustafson, is the antimony authority people recognize in this nation. We also brought on geochemist Aaron Tenesch not long ago to serve as Vice President of the antimony division. John's greatest strength lies in pyrometallurgy — that is, smelting with fire, and so on — while Aaron contributes know-how in the hydrometallurgy side of things, especially froth flotation. Froth flotation is a common milling method used to upgrade mineral ores in this nation, such as copper, nickel, lead, and zinc, among others, by employing particular chemicals matched to the character of the specific mineral being collected. This makes it possible to remove harmful substances from the mineral you want. Here, what we're after is upgrading the antimony trisulfide. Aaron and I collaborated on other projects at other companies, and I'm confident he will be valuable to United States Antimony. As we look for more antimony supplies, we understand that globally the majority of deposits are modest, frequently labor-intensive underground operations lacking beneficiation facilities and — well, generally, this one seems fine. We'll place it in that bag and discard this one since it doesn't seem fine. Our Thompson Falls facilities are designed for the final upgrading that brings material to a final state that meets what the customer specifies. If the grade isn't high enough, we can't process those lower-grade ores. Aaron will assist our efforts to upgrade the subpar antimony trisulfide material into a state our Thompson Falls facility can accept. When it comes to antimony trioxide and antimony metal, the main source of our antimony comes from the waste byproduct of a Canadian lead-zinc smelter. The supply is directly proportional to how much material the smelter handles. Once more, we have searched globally for additional smelters that could have sodium antimonate. And up to now, we haven't succeeded, since most smelters either use a different ore or a different process that doesn't yield the antimony; we keep looking for sources of antimony and any other critical mineral on nonfederal lands within the U.S. and Canada. Nonfederal lands, because our experience has shown that getting permits on federal lands is a lengthy, drawn-out task with no assurance it will work. We're making headway in pinpointing other possible sources. But right now, there's nothing definitive we can report. Over to you, Gary.

Alright, thank you, Joe. I’d like to add just a brief note about antimony compared with zeolite, specifically regarding our business. On the zeolite side, we’re well supplied and now need additional customers since we’ve caught up. With antimony, anything we’re able to produce, we can move. Our buyer list far exceeds the product we have; so these two hard minerals face opposite problems. As Joe said, roughly 1.5 months ago we added a new person, Aaron Tenesch, who has been making calls and speaking with countries around the globe about antimony supply. And we know we’re lacking one piece of the puzzle, which is flotation. So we’ve been in discussions with a number of different companies about how to solve that, and hopefully there will be some news before too long. That’s mainly why we haven’t yet gone to Washington to pursue government funds on the antimony side; we’re trying to get everything lined up; we operate the only smelter currently running in the United States. Hopefully flotation will be in place in the not too distant future. And we’re also working on supply — both our own and supply from other nations that we could process. So we’re trying to place ourselves in a very unique position that nobody else holds, which we believe will draw strong attention from our U.S. government. And from recent conversations with government officials, we know their interest level is very high, because we have additional calls and additional meetings coming up shortly. So we’re pushing very, very hard on both of these hard metals and trying to make this a much bigger company than it is today. Let me move to another item before I hand things to Jonathan Miller; we held our shareholder vote at the end of July. Every existing director was reelected, and 7 different resolutions all passed unanimously. So I want to thank shareholders for placing trust and confidence in your management team and Board members at U.S. Antimony by giving us this overwhelming show of support. And these things will be very helpful going forward as we keep growing the company. Before I hand things to Jonathan, one thing we haven’t been doing since I joined is really any form of marketing to shareholders, because we didn’t have a great story to tell; it was a turnaround situation, and we needed to begin showing improvements in what we were doing. I feel highly confident about doing that now; and that was why Jonathan was brought on board. He had worked with me on some other transactions in the past with other companies. The way marketing works now, with social media and internet platforms, is a whole different picture from back when I was doing this in the '80s, '90s, and 2000s at other companies. So our goal is getting this company into the 21st century, and we've had a lot on our plate, with plenty more to come all the way through the end of the year; so Jonathan, go ahead and say who you are and let everyone know what your role involves on the IR side at U.S. Antimony.

Thanks a lot. Hello, everybody, and good afternoon. My name is Jonathan Miller, and I serve as Vice President of Investor Relations and Global Sales Director at United States Antimony. Over the past 7 years, I've collaborated with hundreds of public companies, acting as a change agent for digitization and automation within the ever-shifting investor relations field. It's a thrill to contribute my knowledge, experience and relationships to UAMY, and to talk with all of you today, bringing you current on the strategic initiatives we're concentrating on as we keep pushing growth and reinforcing our place in the market. To start, I'd like to call attention to our recent OTC Markets virtual presentation, which happened on July 23, where we discussed our progress and plans going forward. Should you have missed it, I urge you to view the recording that's accessible on our website. We've also got a number of events coming up where we'll share our story. On August 14 at 1:00 p.m. Eastern, we will be present at the Sidoti Virtual Investor Conference; and on September 25, with the time still to be determined, we'll take part in the Noble Capital Markets Virtual event. Such platforms offer excellent chances for us to engage with the investment community, and I'm eager to interact with many of you there. I'm happy as well to share news of the debut of our fresh corporate profiles on LinkedIn and Twitter, which is now called X. These channels are going to be essential for keeping you informed with real-time updates; so please do go ahead and follow us to remain aware of our newest developments and insights. Our confidence is additionally boosted by how we've restructured our management and operations teams, which has put us in a position to be not merely profitable, but a dominant force worldwide in the antimony and zeolite markets. Our strategy for outreach and market awareness is another essential area we're focused on. As Gary noted, we're sitting down with leading lobbying firms and congressional leadership in D.C., and we're actively working alongside analysts and firms to boost our visibility and draw in institutional investors. This forms part of our wider effort to obtain government grants and to be instrumental in reinforcing America's critical mineral pipelines and infrastructure. Such endeavors aren't just central to our growth, but also match national priorities, which makes us a strategic participant in this arena. To wrap up, the community ought to feel enthusiastic about our fresh direction and the numerous opportunities we aim to seize. I'm looking forward to delving into these subjects more thoroughly in our Q&A session, and I appreciate your ongoing backing and interest in United States Antimony Corporation.