MOUNT VERNON, N.Y.–(BUSINESS WIRE)–Applied UV, Inc. (NasdaqCM: AUVI) (“Applied UV” or the “Company”), a global leading provider of patented, scientifically and clinically proven surface and air pathogen elimination and disinfection technologies (fixed, mobile, and HVAC), LED lighting products and premium hotel furnishings, announces today its financial results for Q1 2023.
Recent Business Highlights
- Q1 2023 Revenue of $10.7M an increase of 217% over Q1 2022
- Completed the 6th strategic acquisition in 18 months doubling the size of the Company
- Investing in Machine Learning and AI systems to enhance our IAQ and Food Security technologies
- PURO patent pending next generation FighterFlex pathogen elimination technology for facilities HVAC systems expected to launch in late Q3 allowing for international cross market sales
- Addressing global push to improve Indoor Air Quality (IAQ) and Food Security technologies
- Crossing the Bridge to the Internet of Things (“IoT”) – Company expects to incorporate and launch PURONet indoor air monitoring software across all air disinfection devices within the Company’s portfolio
- Launched “Farm to Table” Food Preservation and Security R&D Program addressing the UN Chief Economist estimated Global $400 billion a year crop loss due to spoilage
- Expanded Strategic Relationship with Canon to include Canon Financial Services with end user leasing programs
- Cross Marketing Sales Initiatives beginning to ramp with Multi-million Dollar Order from major Real Estate Developer
- Global distribution reach now includes 89 dealers and distributors in 52 countries, 47 manufacturing representatives and 19 U.S. based internal sales representatives
- Launched a research collaboration with Johnson Controls, USHIO and Applied UV subsidiary Puro Lighting to study the efficacy and safety of filtered far UV-C disinfection technology (222 Nm UV}
Max Munn, founder and recently appointed CEO of Applied UV, Inc., commented, “Q1 2023 was a transformative and pivotal quarter for Applied UV. Cross-market selling opportunities between MunnWorks and LED Supply Co are beginning to ramp as a result of the acquisition, and we fully expect to see further expansion throughout the remainder of the year. Our expectation for realizing synergies across the entire business segments remains intact. Our collaboration with Canon is gaining momentum as we just completed the first lease for one of our customers, and we expect to announce additional strategic initiatives expanding our global reach and market share in food preservation in Q3 2023. Through these strategic transactions and partnerships, we have positioned the Company as a fully integrated solutions provider offering total air and surface pathogen elimination platforms and specialty LED lighting and custom premium furnishings for multiple sectors with total top line revenue expected of approximately $45-50 million for 2023.
Munn continued, “As we stated in Q4 2022, we recognized the accelerating shift in demand for a complete “systems within a system” solution that plays a more permanent role in improving Indoor Air Quality (IAQ), standards that were outlined by the U.S. Government last year. Increasingly, enterprises are seeking end-to-end systems across entire facilities that include software monitoring capabilities. Accordingly, we pivoted our marketing, merger and acquisition strategy, and research and development activities as well as accelerated our IoT development, manufacturing processes and next generation product development roadmap.”
Munn further stated, “Hospitality and LED Supply Co continues to rebound rapidly as hotels and developers resume schedules of new construction, project and building upgrades, remodels and repair and maintenance activities that were postponed due to the pandemic and subsequent closing of the U.S. economy. Hotels and developers are seeking onshore manufacturing alternatives to mitigate supply chain and geopolitical risks, especially in China, and we have established well-performing manufacturing capabilities that can meet this demand. Our acquisition of VisionMark further enables us to design-assist, fabricate, deliver and install high-end hotel living space furnishings and expands our reach into the luxury hospitality market, new construction multi-family development projects and retrofits beyond our core mirror business.”
Munn concluded, “Integration of the six companies we acquired continues, and we are beginning to experience the expected cost savings across all our divisions. Looking ahead in pathogen elimination and disinfection, we are building a pipeline of new opportunities across a number of verticals including, food preservation, cannabis, wineries and education, which we believe will drive future growth and improved financial results.”
The Company has three reportable segments: the design, manufacture, assembly and distribution of disinfecting pathogen elimination systems for use in food preservation, healthcare, hospitality, education and public spaces, cannabis, correctional facilities, and commercial, municipal and residential markets (Disinfection/Healthy Building Technologies segment); the manufacture of fine mirrors and custom furniture specifically for the hospitality industry (Hospitality segment); and the Corporate Segment, which includes expenses primarily related to corporate governance, such as board fees, legal expenses, audit fees, executive management, and listing costs.
Q1 2023 Summary Financial Results
Net sales of $10.7 million represented an increase of $7.3 million, or 217.5% for the three months ended March 31, 2023, as compared to net sales of $3.4 million for the three months ended March 31, 2022. This increase was primarily attributable to the Hospitality segment, which increased $4.7 million, largely as a result of the strategic acquisition on March 25, 2022, of the operations of VisionMark in Brooklyn, NY, which contributed $3.9 million of the increase, and also due to the organic growth of our legacy MunnWorks business, which contributed $0.8 million of the increase. The Disinfection/Healthy Building Technologies segment increased $2.6 million, primarily due the acquisition of PURO Lighting and LED Supply Co. on January 26, 2023.
Gross profit increased $0.8 million from $1.1m, or 34% vs. sales, for the three months ended March 31, 2022, to $1.9m, or 18% vs. sales for the three months ended March 31, 2023. The decrease from 34% to 18% was driven primarily by the higher sales mix of our Hospitality segment as compared to the same period last year. For Q1 2023, Hospitality accounted for 57% of total sales for the quarter as compared to 42% in the prior year quarter. The last of the lower margin projects that we acquired that were in process from the VisionMark asset acquisition have been substantially completed. Additionally, Q1 2023 was impacted by “one-time” lower margins in our Disinfection/Healthy Building Technologies segment as we sold approximately half of our consumer Airocide inventory at special discounted pricing.
Selling, General, and Administrative – S,G&A costs for the three months ended March 31, 2023, increased to $5.3 million as compared to $3.1 million for the three months ended March 31, 2022. This increase of $2.2 million was driven primarily by the expansion of the Disinfection/Healthy Building Technologies segment with the acquisitions of PURO Lighting and LED Supply Co. These acquisitions accounted for $1.4 million of the increase. In Corporate, legal expenses increased $0.6 million primarily as the result of a “one-time” arbitration case.
The Company recorded an operating loss of $3.5 million for the three months ended March 31, 2023, compared to an operating loss of $3.1 million for the three months ended March 31, 2022. The increase of $0.4 million in the operating loss was primarily due to the decrease in the gross profit percentage year over year as explained above, and the impairment charge of $1.1 million that was incurred last year. On a percentage basis, the operating loss improved to 33% in the first quarter of 2023 as compared to 94% in the first quarter of 2022.
The Company incurred interest expense of $0.4 million due to the borrowings of Streeterville Capital and Pinnacle Bank., primarily to help fund the acquisitions of PURO Lighting and LED Supply Co. and to also fund additional working capital requirements.
The Company incurred a non-cash loss on change in fair market value of contingent consideration of $0.6 million because of the make whole provision within the PURO Lighting and LED Supply Co. merger agreement. The change related to the decrease in our stock price from the date of acquisition of January 26, 2023, as compared to March 31, 2023.
The Company recorded a net loss of $4.5 million for the three months ended March 31, 2023, compared to a net loss of $1.6 million for the three months ended March 31, 2022. The increase of $2.9 million in the net loss was mainly due to the $1.4 million increase in S,G&A costs incurred as a result of the acquisitions of PURO Lighting and LED Supply Co. in support of the expansion to the Disinfection/Healthy Building Technologies segment; the $0.6 million increase in Corporate legal expenses largely as a result of a “one-time” arbitration case and the non-cash loss on change in fair market value of contingent consideration of $0.6 million because of the make whole provision within the PURO Lighting and LED Supply Co. merger agreement (see comment above in Other Income/Expense).
On July 1, 2022, the Company filed a $50,000,000 mixed use shelf registration (Form S‑3) and entered into an At The Market sales agreement (“ATM”) with Maxim Group, LLC for a total of $9,000,000, as a readily available source of funding if needed. During the year ended December 31, 2022, the Company sold 804,811 ATM shares through the sales agent with gross proceeds of $964,083. In connection with the sale of these ATM Shares, the compensation paid by the Company to the Sales Agent was $28,922. As of March 31, 2023, an additional 1,764,311 shares have been sold for gross proceeds of $2,314,860, and the compensation paid by the Company to the Sales Agent was $69,446, leaving a balance of $5,721,057 on the ATM facility. The shelf registration statement will expire on July 12, 2025.
The Company has filed a Registration Statement with the Securities and Exchange Commission with its plans to commence a public offering of its securities for an amount that satisfies the Company’s’ current working capital needs.
The Company believes our sources of liquidity and capital will be sufficient to finance our continued operations and growth strategy.
Conference Call/Webcast Information
Applied UV’s management team will host an investor conference call and live webcast on May 23, 2023, at 9:00 am ET. Investors can access the live webcast via a link on Applied UV’s web site or at https://www.webcaster4.com/Webcast/Page/2626/48458 . For those planning to participate on the call, please dial +1-888-506-0062 (for domestic calls), or +1-973-528-0011 (for international calls), passcode 837349.
A replay of the conference call will be available online on the Applied UV web site, and a dial-in replay will be available for one week following the call at +1-877-481-4010 (for domestic calls) or +1-919-882-2331 (for international calls), replay passcode 48458.
About Applied UV
Applied UV, Inc. (“AUVI”) provides proprietary surface and air pathogen elimination and disinfection technology focused on Improving Indoor Air Quality (IAQ), specialty LED lighting and luxury mirrors and commercial furnishings all of which serves clients globally in both the commercial and retail segments.
Our products address the needs in the healthcare, hospitality, food preservation, cannabis, education, winery vertical markets. The Company has established strategic manufacturing partnerships and alliances including Canon Virginia Inc, Acuity Brands Lighting, Johnson Controls International, Siemens, W.W. Grainger, and a global network of 89 dealers and distributors in 52 countries, offering a complete suite of products through its two wholly owned subsidiaries – SteriLumen, Inc. (“SteriLumen”) and Munn Works, LLC (“MunnWorks”). SteriLumen owns brands and markets a portfolio of clinically proven products utilizing advanced UVC Carbon, Broad Spectrum UVC LED’s, Photo-catalytic oxidation (PCO) pathogen elimination technology, branded Airocide ™, Scientific Air™, Airoclean™ 420, Lumicide™, PUROHealth, PURONet, and LED Supply Co. SteriLumen’s proprietary platform suite of patented, surface and air technologies offers, the most complete pathogen disinfection platform including mobile, fixed and HVAC systems and software solutions interconnecting its entire portfolio suite into the IoT allowing customers to implement, manage and monitor IAQ measures recommended by the EPA across any enterprise. SteriLumen’s Lumicide™ platform applies the power of ultraviolet light (UVC) to destroy pathogens automatically, addressing the challenge of healthcare-acquired infections (HAIs) in several patented designs for infection control in healthcare. LED Supply Co, is a full-service, wholesale distributor of LED lighting and controls used throughout facilities in North America.
MunnWorks manufactures and sells custom luxury and backlit mirrors, and conference room and living spaces furnishings.
Our global list of Fortune 100 end users including Kaiser Permanente, NY Health+Hospitals, MERCY Healthcare, Baptist Health South Florida, New York City Transit, Samsung, JB Hunt, Boston Red Sox’s Fenway Park, JetBlue Park, France’s Palace of Versailles, Whole Foods, Del Monte Foods, U.S. Department of Veterans Affairs, Marriott, Hilton, Four Seasons and Hyatt, and more. For information on Applied UV, Inc., and its subsidiaries, please visit https://www.applieduvinc.com.