NEW YORK, NY – (NewMediaWire) – Applied UV, Inc. (NASDAQ: AUVI), a leader in global food security, air quality, and specialty building solutions today announced financial results for the third quarter and nine months ended September 30, 2023.
“With continued strong revenue momentum and sustained progress on the path to profitability, we are delivering against the key milestones we laid out earlier this year. I’m proud of how our teams are executing our growth strategy,” said Max Munn, CEO of Applied UV. “Our innovation and commercial capabilities continue to enhance the value proposition of our brands and we have made meaningful progress on our transformation initiatives to improve our operational execution. We remain confident that these efforts will position us to deliver significant value over the long-term.”
Financial Highlights – Third Quarter
- Total revenues for the third quarter of 2023 of $11.4 million, representing a 94.8% increase over the third quarter of 2022
- Gross profit grew to $2.7 million in the third quarter of 2023, up 216.6% from $0.8 million in the third quarter of 2022.
- 11.2% improvement in operating loss for the third quarter year over year
- 30.8% improvement in adjusted EBITDA (non-GAAP) for the third quarter year over year
- Reaffirms its previous guidance of approximately $45 million in revenue for 2023
Business Highlights – Third Quarter and Recent Highlights
- Initiated an organizational restructuring plan intended to improve operational performance and to position the business for long-term growth while establishing a clear path to consistent profitability and sustainable free cash flow.
- Collaborating and transitioning all next generation and future R&D to Canon Virginia to leverage its vast engineering, software applications and new product launch expertise.
- Introduced Airocide® Pro+ air food preservation solution designed to control ethylene levels and extend shelf life at the Global Produce & Floral Show, together with Canon Virginia, a subsidiary of Canon U.S.A.
- United States Patent and Trademark Office issued a patent US 2023/0059472 A1 for the Company’s Airo™ Vortex, encompassing advanced disinfection capabilities and Photocatalytic Oxidation. Concurrently, the Company also received publication notice on its Fighter Flex™ LED. This next-generation Fighter Flex™ LED technology is designed to enhance the Company’s advanced HVAC and Smart Buildings technology, marking another significant step in Applied UV Inc.’s journey towards creating innovative solutions for indoor air quality and building efficiency.
- Received approval of patent US 11,788,265 B2 for its “INTERCHANGEABLE DRAIN DISINFECTING DEVICE” designed to optimize UV source irradiation to effectively disinfect drain systems to enhance hygiene and safety.
Q3 2023 Summary Financial Results
Net sales of $11.4 million represented an increase of 94.8% for the three months ended September 30, 2023, as compared to net sales of $5.9 million for the three months ended September 30, 2022. The Disinfection/Healthy Building Technologies segment increased $4.1 million, primarily due to the acquisition of Puro Lighting and LED Supply Co. on January 26, 2023. Additionally, the Hospitality segment increased $1.4 million as that market continues to improve and our operations have been streamlined to meet the increased demand.
Gross profit increased $2.7 million, or 216.6%, for the three months ended September 30, 2023, as compared to $0.8 million for the three months ended September 30, 2022, driven by increased sales in the Disinfection/Healthy Building Technologies segment and improved margins in the Hospitality segment.
Selling, General, and Administrative (SG&A) Expense
SG&A costs for the three months ended September 30, 2023, increased to $4.7 million as compared to $3.3 million for the three months ended September 30, 2022. The increase of approximately $1.4 million was driven primarily by the acquisitions of Puro Lighting and LED Supply Co., which accounted for an increase of approximately $1.9 million of the increase, but was offset by a reduction in other SG&A of approximately $0.5 million.
Other expense was $0.1 million for the three months ended September 30, 2023, which includes $0.5 million in interest expense, offset by a $0.4 million gain on the change in fair market value of contingent consideration.
The Company recorded a net loss of $2.6 million for the three months ended September 30, 2023, compared to a net loss of $2.7 million for the three months ended September 30, 2022.
Adjusted EBITDA, a non-GAAP financial measure, is defined as Operating Profit (Loss), excluding Depreciation and Amortization, and excluding Stock Based Compensation and Loss on Impairment of Goodwill/Intangible Assets. Adjusted EBITDA was a loss of $1.5 million for the third quarter of 2023, compared to a loss of $2.1 million for the third quarter of 2022.
|Adjusted EBITDA Non-GAAP Financial Measure|
|2023 Q3||2022 Q3|
|Operating (Loss)||($2.4 million)||($2.8 million)|
|Exclude: Depreciation and Amortization||$0.7 million||$0.5 million|
|Exclude: Stock Based Compensation||$0.2 million||$0.2 million|
|Adjusted EBITDA||($1.5 million)||($2.1 million)|
We believe Adjusted EBITDA provides investors with useful information on period-to-period performance as evaluated by management and comparison with our past financial performance. We believe Adjusted EBITDA is useful in evaluating our operating performance compared to that of other companies in our industry, as this measure generally eliminates the effects of certain items that may vary from company to company for reasons unrelated to overall operating performance.
Net cash and cash equivalents as of September 30, 2023, are approximately $1.5 million. The Company’s secured revolving credit facility with Pinnacle Bank has approximately $1.2 million available as of September 30, 2023. Total cash and borrowing availability is approximately $2.7 million as of September 30, 2023. Net cash used in operating activities was approximately $7.8 million for the nine months ended September 30, 2023. Net cash used in operating activities improved in the third quarter when compared to the net cash used of $6.6 million for the six months ended June 30, 2023.
On November 16, 2023, the Company closed on an underwritten public offering with gross proceeds to the Company of approximately $6.4 million, before deducting underwriting discounts and other estimated expenses payable by the Company. The Company intends to use the net proceeds from this offering for the repayment of notes, and for general corporate purposes, including working capital.
The Company believes by implementing its strategic plan for 2024, including the continued realization of cost savings from the synergies of its acquisitions completed in 2023, that it expects to be cash flow neutral in the latter half of 2024.
About Applied UV
Applied UV, Inc. engages in the pursuit of technologies focused on global food security, air quality, and specialty building solutions tailored for the commercial and hospitality sectors. More details about Applied UV, Inc., and its subsidiaries can be found at https://www.applieduvinc.com.