Greetings! Welcome to the TOMI Environmental Solutions Incorporated Second Quarter 2023 Financial Results Conference Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to your host, John Nesbett of IMS Investor Relations. You may begin.
Good afternoon. Thank you for joining us today for the TOMI Environmental Solutions Investor Update conference call. On today's call is TOMI's Chief Executive Officer and Chairman of the Board, Dr. Halden Shane, TOMI's Chief Operating Officer, E.J. Shane, and TOMI's Chief Financial Officer, Nick Jennings. Dr. Shane will provide an overview of recent business highlights, E.J. will report the company's growth and latest trends, and Nick will review the financial performance for the most recent quarter before we will address any questions you may have. The telephone replay of today's call will be available through August 28, 2023. The details of which are included in the company's press release, which was issued today. The webcast replay will also be available on TOMI's website, www.tomimist.com.
Please note that information contained within this presentation is relevant only to the date which it was recorded, August 14, 2023. You are therefore advised that time-sensitive information may no longer be accurate at the time of any replay. Certain written and oral statements made by management of TOMI may constitute forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements should be evaluated in light of important risk factors, because actual results differ materially from anticipated results. The information provided in this conference call is based upon the facts and circumstances known at this time. The company takes no obligation to update these forward-looking statements after the date of this call. In addition, TOMI will discuss certain non-GAAP financial measures during this call.
The company uses non-GAAP measures because it believes they provide useful information about operating performance, which should be considered by investors in conjunction with the GAAP measures. The reconciliation of these non-GAAP measures to comparable GAAP measures is included in the earnings release dated August 14th, 2023. I will now turn the call over to TOMI's Chairman and Chief Executive Officer, Dr. Halden Shane. Go ahead.
Thank you, John, good afternoon, everybody. Thank you for joining and spending a portion of your summer with us this afternoon or evening, or even morning, depending upon where you're located. The financial results for the second quarter are some of the best we've seen since 2020, as we made a small profit on EBITDA basis and broke even from the EPS perspective on our statement of operations. The improved results were driven by increased sales, strong gross profit, and prudent management of our operating expenses. We grew consolidated net revenue for the quarter of 2023 over the same quarter of 2022 by 90%, which proved a nice boost to our financial results for the second quarter.
Our revenue for the six months ended June 30, 2023, was up 16% over the same prior year period. During the second quarter, our SteraMist product revenue grew by 100% compared to the second quarter of last year, and our iHP service re-revenue was up 55%. On a sequential basis, our consolidated net revenue for the second quarter grew by 75% when measured against our reported revenue for the first quarter of 2023. The growth in revenue was largely attributable to strong growth in our product and service revenue, as well as our team's ability to execute and deliver two iHP SteraMist Custom Engineered System, better known as CESs, in the second quarter. In the quarter, we realized a slight net loss of $89,000, which represents a 90% quarter-over-quarter improvement.
Our loss from operations in the second quarter of 2023 improved by 93% compared to the reported operating loss incurred in the first quarter of 2023. Our earnings per share for the second quarter of 2023 was $0.00 per basis and diluted share, which represents a $0.04 loss per basic share improvement compared to the same prior year period. EBITDA and adjusted EBITDA for the three months ended June 30, 2023, was approximately $2,000, compared to a loss of $780,000 reported in the same prior year period. Year to date, we have made significant progress expanding our domestic and international distribution partners.
While we recognize that it will take time to onboard, train, and support these new partners effectively, but we are increasingly selective in the partners we work with and firmly believe that expanding our sales capabilities through these partnerships will enable us to extend our market reach significantly. Thus far in 2023, we have added six new distributors throughout North America, Europe, and Africa, while in tandem, adding new domestic independent manufacturing representatives. We recently entered into a distributor agreement with Avantor, a Fortune 500 company and a leading supplier of mission-critical products and services. We expect a distributor agreement to expand our sales channels into the vital research, development, and production activities in the cleanroom space for biopharm, healthcare, government, and advanced technologies, and applied material industries. To expand our presence in Europe, we added International Business Development, IBD, as a distributor in Italy.
Our partnership with IBD originated during an INTERPHEX conference earlier this year. During the event, IBD had the opportunity to acquaint themselves with SteraMist and subsequently evaluated its efficacy at one of TOMI's existing customers in Italy. Currently, TOMI and IBD are in the early stages of collaborating with multiple manufacturers of clean room equipment for the potential of using our SteraMist Integrated System, or SIS. During the second quarter, we also entered a contract with Vizient Inc, increasing our presence in the U.S. healthcare system. Vizient is the largest group purchasing organization, GPO, in the healthcare industry, supplying around $100 billion in annual member purchasing volume. Vizient serves approximately 97% of the nation's academic medical centers, more than 50% of the nation's acute care health system, and serves more than 20% of the nation's ambulatory market.
This contract enables us to supply SteraMist systems to a wide range of healthcare providers, including academic medical centers, pediatric facilities, and community health providers through Vizient's nationwide network. We will be attending our first conference with Vizient later this year. We, of course, remained active in our marketing initiatives and attended and presented our SteraMist brand of products at nine different trade shows during the second quarter. At this point, I'd like to hand over the call to TOMI's COO, Elissa Shane, who will provide you with an overview of the company's upcoming plans and objectives for the rest of the year. Thank you. E.J.?
Thank you, Dr. Shane, and good afternoon, everyone. I appreciate the opportunity to share TOMI's progress, growth trends, and upcoming developments on today's call. I will begin by providing updates on some matters discussed during our previous call. The collaboration with the German biotechnology company, which is set to lead to several orders for our CES, continues to be very active. Our long-term partner, Universal Disinfection, continues to foster this partnership directly with TOMI, in addition to their continued brand expansion of iHP SteraMist across areas in Europe. We anticipate the closure of some large orders within this calendar year for a few of these opportunities. Consistent with our previous communications, it is once again worth noting that the scheduling for our larger orders, especially the custom units, remains flexible and in response to customer timelines. However, it's crucial to emphasize that our pipeline remains robust and very promising.
As anticipated during our last call, we concluded the second quarter by successfully installing additional systems, bringing our count to 14 installed SteraMist Custom Engineered Systems. Our recently installed projects remain to undergo qualification and are set to be operational by the close of the first quarter of 2024. Naturally, this timeline is contingent upon the operational readiness of the end user's production facilities, leading to variable revenues from BIT Solution and associated services moving forward. Our collaboration with the prominent indoor farming solutions enterprise continues as we actively engage in their comprehensive qualification procedures, which now includes partnering up with the USDA. Upon securing final approval, we intend to publicly reveal this partner, an organization dedicated to extending SteraMist utilization across all upcoming facilities. Notably, this indoor farming entity has initiated construction on new structures and allocated resources for the expansion of SteraMist applications.
This development stands as a pivotal occasion for TOMI to demonstrate the versatility and efficacy of iHP within the realm of food safety. The potential for growth through this partnership remains substantial. Since our last earnings call, our ongoing dialogues with potential clients interested in Custom Engineered Systems has expanded by 36-42. Our confidence in the prospects of our fully automated iHP system continues to grow, strengthened by this positive trend of interest. Our ongoing conversations and proposals for the CES product line collectively equates to approximately $10 million. Some of these engagements are near term, and some are projected to be installed over the next few years. This attests to the significant potential and demand for our game-changing technology in replacing conventional practices. Our new automated turnkey solution, known as SteraMist Integrated System, or SIS, is gaining considerable traction.
This is an integrated iHP solution for decontamination chambers, cabinets, cage washers, and module cleanrooms. Notably, our roster of key partners for this product has expanded from seven to an impressive 15, from design consultants to manufacturers of equipment, all expressing keen interest in collaborating with TOMI in adopting or assisting on the implementation of iHP decontamination. Six of these manufacturing partners have been introduced through our new European distributor, which Dr. Shane mentioned earlier. The Cellares relationship that we announced earlier this quarter is particularly exciting. Cell therapy manufacturing is a multibillion-dollar industry growing very quickly. Our technology will be integrated into their cell therapy manufacturing system. Maintaining a sterile environment is critical for Cellares, and our product offered advantages over other commercially available decontamination methods, and we will continue to keep you updated as this relationship progresses. Ensuring worldwide recognition remains a pivotal aspect of our strategy.
In addition to our collaboration with Pfizer, we remain deeply engaged with other prominent global enterprises that specialize in our market segments. For example, Fresenius Kabi facility in Brazil, has procured SteraMist equipment and are undergoing the qualifying process. In tandem, we are working closely with many key figures in the company, evaluating the product viability in other facility locations around the globe, which spans across 47 countries. Finally, we continue to put considerable focus on the organization on effective onboarding, education, and customer support. Our customer service continues to improve, reflected by the growing number of repeat orders from our broadening existing customer base. Thank you, I will now turn the call over to our CFO, Nick Jennings.
Thank you, E.J. Hello, everyone. I'll provide a brief overview of our financial results for the second quarter, 2023, compared to the same prior year period. For the three months ended June 30th, 2023, compared to June 30th, 2022, our consolidated net revenue was $2,775,000, compared to $1,458,000, representing an increase of $1,317,000, or 90%. Consolidated gross profit was 61% compared to 63%. The decline in our gross profit was due to our product mix and sales. The consolidating operating loss was $89,000 compared to $863,000, representing a decrease of $774,000 or 90%.
The decline in our loss from operations was attributable to higher sales and gross profit in the current year period. Our consolidated net loss was $89,000 or $0.00 per basic and diluted share, compared to $862,000 or $0.04 per basic share. Adjusted EBITDA was approximately $2,000 compared to a loss of $780,000. A table reconciling adjusted EBITDA to the appropriate GAAP financial measure is included with today's press release. Moving on to the balance sheet. As of June 30, 2023, our cash and cash equivalents were approximately $1.6 million, working capital was $7.8 million, and shareholders' equity was $10.4 million. Now I'd like to turn the call back over to Dr. Halden Shane.
Thank you, Nick. Thank you all for joining us today and for your unwavering support as investors and followers of our company. We believe our second quarter results have us back on track and have given us a lot of momentum heading into the second half of 2023. At this point in time, we believe that we may obtain profitability in the fourth quarter and beyond. Thank you for your time and your support, and don't forget to review our new website at www.steramist.com. Operator, open to questions, please.
At this time, we'll be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press Star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we pull for questions now. Okay, we have our first question from Tim Pioli of Day Street Partners.
Yeah. Hey, thanks for taking my question. Obviously, the gross margin in your business are, you know, very attractive. I was just wondering, how should we think about gross margins going forward as you scale the business?
As we scale, we should really see our gross margins potentially improve, particularly as we drive more solution sales into the installed base of equipment, which is basically our model, which is a razor, razor blade type model. That's how I think it's, you know, again, and we have a relatively high gross margin, and it contributes to our relatively low break-even point. Thanks for the question.
Got it. All right, thank you. That's it for me.
Our next questioner is Todd Felty with Aegis Capital Corp.
Hey, congratulations on the return to breakeven, and I look forward to the future quarters of profitability. Had one question on the ethylene oxide. You had a press release on April 26, dealing with ethylene oxide exposure, and was just curious as if there's been any progress made. I know that SteraMist was a viable solution for that.
... It is, and we're doing work to prove that, from a standpoint of medical equipment and medical supplies, that we will be a very very valuable alternative to ethylene oxide in sterilization. Again, we have to go through the regulatory processes for that, and currently, we've had some great results with it. We look forward to being able to produce sterilization equipment, and to market it as such in the very near future.
Okay, that's great to hear. One other quick question.
Sure.
I know that you had, had the U.S. Army validate the SteraMist technology, and you've been getting some test runs with HHS and other government entities. I think you're even gonna be used in one of the infectious labs in Africa. Is there any update on either the Army or HHS or any other government contracts are moving forward?
Not at the moment. They don't do things quick enough for me, but they are moving forward. We are working on getting validation for fentanyl in real life, so I feel that we'll be able to neutralize it. We're just waiting to get the laboratory verification of that, which should again, open up a lot of potential doors for us to use SteraMist in, unfortunately, those fentanyl areas.
Okay. Thanks again for taking my questions. That's all for me.
Thanks for your support, Todd.
A reminder that if you would like to ask questions, to please press star one on your telephone keypad at this time, star one. We do hear now from John Nelson, a private investor.
Hi, Halden, congratulations on the quarter, and look forward to future profitability of the company.
Thank you, John.
I have several questions. The first one was regarding your, the prior, military government contracts. You mentioned fentanyl neutralization. Could you explain a little bit more about SteraMist's role in that process?
Well, I believe that, you know, when the laboratory studies come in, that we should be able to neutralize fentanyl in all enclosed space, which would open up a lot of avenues for the product, especially, you know, when you hear on the news what's occurring with police when they come up to a backpack, or they open it, and they get exposed to some of the toxic fumes of fentanyl. That same problem's occurring in classrooms and, and lockers in high schools and even unfortunately in junior high schools around the country. This would be a product, once we're able to prove that, that could be utilized on scene of any suspicious locker area where fentanyl might be located.
Okay. Good. That sounds very promising. The, also, in the prior, a prior press release mentioned Technimount System in Canada, for EMS. Could you describe any progress with business there?
I'll let E.J. talk about that, as she seems to be handling the account. E.J.?
Certainly, Dr. Shane. Yes, so Technimount came on earlier this year, and they are warehousing equipment and moving SteraPak and surface units and emergency services. They are fully onboarded and trained and attending trade shows and getting the word out of SteraMist in their area. They do seem to be very active just in the correspondence between us on a weekly basis, so I'm excited to see them progress throughout the year.
Have they made any sales so far, or are they still in the process of just kind of rolling it out and marketing it?
They have sold a few. They're in the process of mainly rolling it out and, and marketing it. It's how we're bringing on our partners with a little more full of an onboarding and getting them educated into the marketplace.
Sure.
They have attended shows, and they come with a very unique customer list already, so they're definitely gaining interest in their current customers.
Okay. Thank you.
Yeah.
next question is, any progress with the FDA on, I believe it was the 1% solution for, produce treatment?
Nothing further than from my last discussion about it, to my knowledge, John.
Okay. Another, I think it was last call, Is there any progress on penetrating the marijuana market for treating powdery mildew?
Yeah, I believe that we are doing that. E.J., do you have any color to add to that?
Yes. We're actually also putting a, a move forward on getting our brand familiar with the industry, attending podcasts and through our, some of our TSN members, who are coming up with really good, good results. Again, it's, it's a new technology to the industry, so it's gaining awareness and traction, but we should see some of this results by the end of the year.
Okay. Just a kind of a sidebar, the wine industry has problems with treating their vines for the same fungus, powdery mildew. Has there been any exploration of seeing whether SteraMist might be valuable for any of the large wineries?
I don't believe we have. From a standpoint of feasibility, it's definitely a feasible industry to go after, specifically since they store a lot of this stuff, you know, even once it's, you know, fermented in, in areas that have a lot of mold and stuff. From a direct application to the vine, prior to planting, you know, it might be interesting to see how we would do. I know we're continuing to work with the seed companies on eradicating different pathogens from seeds prior to packaging them, to sell to retail purchasers. You know, again, I mean, you know, the, the applications are endless, as you know, for the product. You know, w- we keep up on as much as we can, you know, depending upon obviously, as the size of the company is.
As we grow, we'll be able to go into more verticals and do more research in these areas. It's a good question, John. Thank you.
Okay. Hey, thanks. Also, any further updates on the Ever-Shield study ?
I knew you, I knew you were gonna ask that. I try not to mention it on my on my earnings calls thus far, because I think they're reading it, and it's delaying their desire to edit and publish this. You know, there's nothing further that I have, but I, I will be meeting with them, in the early part of September.
Okay, good. That's it for questioning, but congrats on the Avantor and Vizient partnerships in particular, because, you know, the, at least in my opinion, TOMI needs to get more exposure on SteraMist, and those are two big players that will, if they're motivated, will certainly get the word out.
Thank you, John, and thank you for your support.
You're welcome.
Okay. As we have reached the end of our question and answer session, I would like to turn the floor back over to management for any closing remarks.
Just to say once again, I thank everybody for joining, and, hope you have the remaining enjoyable August that one can get. Thank you.