TOMI Environmental Solutions, Inc. Q4 FY2024 earnings call

• Business strategy remains on track despite one-time non-cash expenses impacting GAAP results. Pipeline is healthy with preliminary first quarter results improved over last year. - Launched SteraMist Integrated System (SIS) platform in October 2024, pipeline of opportunities for SIS grew to over $1 million. Secured first 2025 CES deal and three more SIS offerings totaling ~$575,000 in sales. - Signed six additional partners in 2024 across various regions, with Malaysian partners leading in standardizing treatments for BIBO chambers, Indian partner bringing cleanroom manufacturing experience. - iHP Corporate Service division strengthened with contracts extending through 2026, Q1 2025 showing 42% increase compared to same period last year. Partnered with Enviro-Mist. - In food industry, egg white manufacturing company ordered additional SteraPaks, multinational food and beverage corp interested, SteraPak in use at multiple locations. Collaborations on new studies for food industry applications. - Diversified TOMI Service Network, launched SteraMist Pro Certified program. Completed studies on foot-and-mouth-disease virus, African swine fever, cannabis flowers, mycotoxins. - Expanded support services for customers with comprehensive options from basic training to full validation packages. Notable clients in 2024 included NASA, universities, 503B compounding pharmacies, labs, Zoetis, etc. - Reduced costs in R&D (41%), advertising and sales commissions (17%), consulting expenses (20%) in 2024.

In 2024, TOMI's GAAP revenue rose to $7,739,000, up from $7,355,000 in 2023. Non-GAAP revenue was approximately $8 million, nearly a 6% increase over 2023. Mobile equipment sales totaled approximately $3.8 million in 2024, a 23% growth compared to 2023. Service generated around $2 million, a 23% increase from the previous year. BIT Solutions sales reached approximately $900,000, marking 9% growth. Support and maintenance for current customers saw a notable 28% increase. Non-GAAP gross margins were 60% compared to 59% in the prior year. GAAP gross profit was 46%, down from 58% primarily due to increase in inventory reserves. GAAP operating loss was $4,105,000 compared to $3,349,000 in the prior year. Non-GAAP operating loss was $1,678,000 compared to $2,785,000 in the prior year. GAAP net loss was $4,477,000 or $0.22 per basic and diluted share compared to $3,403,000 or $0.17 per basic and diluted share. Non-GAAP non-loss was $2,050,000 or $0.10 per basic and diluted share compared to $2,838,000 or $0.14 per basic and diluted share in the prior year.

• Plan to continue nurturing pipeline of CES, hybrid, and SIS sales. Enhance sales infrastructure by establishing new distribution channels, recruiting independent representatives, and bringing in qualified business developers. - BIT Solution sales showing 200% increase year-to-date compared to same period last year. - iHP corporate service deployment maintains a $1 million pipeline with open proposals for 2025. - Initiated project with major corporation focused on decontamination of heart monitoring devices, valued at ~$288,000. - Explore expansion opportunities in agricultural sector with Algafeed, partnership at University of Iowa for statistical data, rebuilding brand in Panama, Nigeria, Israel, establishing relationships in Australia, adding distributors in Costa Rica and Brazil. - Continue to play role in restoring structures impacted by California wildfires, support food safety industry, achieve compliance and validation by third platforms. - Uphold strong portfolio of intellectual properties, seek EPA label for 1% hydrogen peroxide for direct food applications, FMDV, African swine fever studies, and cannabis and food safety industries. - Collaborate with partners to share cost of goods due to potential price increases from tariffs.

• Tariffs on manufacturing equipment could impact costs, though currently not expecting significant ramifications. - Regulatory changes, such as at the EPA and FDA, could affect timeline for obtaining labels for SteraMist iHP for direct food applications and other uses. - Returns of orders in 2024 due to changes in scope of use, though no returns in 2025 to date, which were one-time unusual events.

Q: Hey guys, congratulations on a good and productive year in the recent contract wins. I know you spoke about some of your revenue backlog. Are you able to give any guidance for revenues this year? I know earnings per share is affected by a lot of things, but maybe some margin information?

A: Halden Shane mentioned margins should remain around what they've been. E.J. Shane talked about pipeline based on CES and SIS projects on equipment and servicing end with deliverables throughout the year into 2026.

Q: Hi, everybody. First question is, do you expect any ramifications from the tariff situation to impact your company?

A: Halden Shane said he doesn't think so currently, tariffs are unknown and fluid, but if they do, they'll announce, but at the moment, not expecting impact.

Q: You have an amazing list of opportunities for 2025 that you've listed in pretty good detail. Is the cash level at the end of the year adequate to address these opportunities?

A: Halden Shane said they're looking to do a raise similar to a couple years ago with convertible notes, 12% and about $3 - $3.5 million, and with current book of business, cash, and existing accounts receivable, they think no problem.

Q: I was also going to ask you if you've had investigated establishing a credit line, but if you've got the cash lined up, that kind of negates that. Is the scope of the -- you mentioned the three orders that were returned. Was that just due to a project getting canceled or can you provide any more details on that?

A: Halden Shane said it absolutely was a one-time event, no returns to date in 2025, due to clients learning more about technology and accommodating them, and one related to a federal grant removed prior, and they did what was needed for GAAP accounting.

Q: I was also going to ask you about the FDA and the 1% solution for treating produce and other food products is, do you have any sense as to how close we might be on any kind of ruling for that?

A: Halden Shane said it's hard to say currently due to changes in regulatory agencies, would have to circle back on that.