Earnings call transcript: TOMI Environmental Solutions Q1 2025 shows growth

TOMI Environmental Solutions Inc. (TOMZ), with a market capitalization of $16.79 million, reported its Q1 2025 earnings, revealing a net loss of $0.01 per share, while revenues increased by 42% year-over-year to $1.577 million. Despite the revenue growth, the company’s stock declined 6.45% in after-hours trading, reflecting investor concerns over the earnings miss and future guidance. According to InvestingPro analysis, the stock appears undervalued, with analysts setting a significantly higher target price of $3.50. TOMI’s innovative product launches and strategic partnerships indicate a positive outlook, but market reaction suggests caution.

Key Takeaways

• Revenue for Q1 2025 was $1.577 million, a 42% increase from the previous year.
• The net loss narrowed to $256,000, or $0.01 per share.
• Stock fell 6.45% in after-hours trading following the earnings announcement.
• New product launches and partnerships signal potential growth.
• Future guidance shows expected improvement in earnings by FY2026.

Company Performance

TOMI Environmental Solutions demonstrated robust revenue growth in Q1 2025, with a 42% increase compared to Q1 2024. The company’s focus on product innovation and expanding its market presence contributed to this performance. However, despite narrowing its net loss, the company’s earnings per share (EPS) did not meet market expectations. TOMI’s strategic initiatives in food safety and medical device disinfection markets are positioning it well for future growth.

Financial Highlights

• Revenue: $1.577 million, up 42% year-over-year.
• Product-based revenues: $1 million, a 35% increase.
• Service revenues: $577,000, up 56%.
• Gross margin: 60.4%.
• Operating loss: $754,000, improved from $1.226 million the previous year.
• Cash and cash equivalents: $674,000.
• Working capital: $3.8 million.
• Shareholder equity: $3.8 million.

Earnings vs. Forecast

TOMI reported an EPS of -$0.01, missing analysts’ expectations. The company has historically faced challenges in meeting earnings forecasts, and the current quarter’s results reflect a continuation of this trend. The revenue of $1.577 million, however, indicates strong growth, suggesting that while profitability remains an issue, the company’s sales strategies are effective.

Market Reaction

Following the earnings announcement, TOMI’s stock price fell by 6.45% in after-hours trading, settling at $0.785. This decline reflects investor disappointment with the earnings miss and cautious outlook. The stock has experienced a challenging year, with a year-to-date decline of 20.95%, though it maintains a positive one-year return of 27.69%. The stock trades between its 52-week range of $0.60 to $1.50, highlighting ongoing volatility and investor skepticism despite revenue growth. InvestingPro data reveals the company’s overall financial health score as "Weak," suggesting careful analysis is warranted.

Outlook & Guidance

TOMI’s future guidance suggests a gradual improvement in earnings, with an EPS forecast of -$0.15 for FY2025 and a positive $0.11 for FY2026. Revenue projections also show growth, with anticipated increases to $8.32 million in FY2025 and $19.16 million in FY2026. The company is optimistic about its potential new partnership, which could significantly boost service revenues.

Executive Commentary

Dr. Haldon Shane, CEO of TOMI, expressed confidence in the company’s future, stating, "We know that 2025 is gonna be a great year." He also highlighted the growing importance of food safety, predicting it will surpass life sciences in significance. Dr. Shane emphasized the company’s excitement about a potential new partnership that could become its highest service customer.

Risks and Challenges

• Continued operating losses may impact financial stability.
• Market volatility could affect stock performance.
• Dependence on new partnerships for revenue growth.
• Potential regulatory changes in key markets.
• Competitive pressures in the disinfection technology sector.

Q&A

During the earnings call, analysts inquired about the impact of government budget cuts, to which TOMI responded that no significant effects are expected. Questions also focused on the company’s expansion into food safety applications and its efforts to replace ethylene oxide in disinfection processes. The development of educational platforms for technology adoption was also discussed, indicating a strategic focus on market education.

Full transcript - TOMI Environmental Solutions Inc (TOMZ) Q1 2025:

Conference Operator: Greetings. Welcome to the TOMI Environmental Solutions Inc. First Quarter two thousand twenty five Financial Results Conference Call. Please note this conference is being recorded. I will now turn the conference over to your host, Rosalynn Christian from IMS Investor Relations.

You may begin.

Rosalynn Christian, Investor Relations, IMS Investor Relations: Thank you, operator, and thank you for joining us today for the TOMI Environmental Solutions Investor Update Conference Call. On today’s call is TOMI’s CEO and Chairman of the Board, Doctor. Haldon Shane E. J. Shane, TOMI’s Chief Operating Officer and Nick Jennings, Interim CFO.

A telephone replay of today’s call will be available through 05/22/2025, the details of which are included in the company’s press release dated 05/08/2025. A webcast replay will also be available at TOMI’s website, www.steramis.com. 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 that could cause our actual results to differ materially from our anticipated results. The information provided in this conference call is based upon the facts and circumstances known at this time.

The company undertakes no obligation to update these forward looking statements after the date of this call. I will now turn the call over to TOMI’s CEO and Chairman of the Board, Doctor. Haldon Shane.

Dr. Haldon Shane, CEO and Chairman of the Board, TOMI Environmental Solutions: Thank you, Rosalind, and good afternoon, everyone, and thank you for joining the TOMI Environmental Earning Call. In this update, we will highlight key developments since our recent report which wasn’t very long ago on the 2,024 figures. Shared less than a month ago, we’re excited to share that TOMI is making remarkable progress and is firmly committed to achieving success in 02/2025 as reflected by the numbers reported for the first quarter. I will also outline our plans for the remainder of the year. We are moving through the year with considerably stronger product line and distribution strategy.

We have new and diverse service offerings we launched in 02/2024, along with our innovative product line, the SIS SA. Additionally, our recent collaborations with partners like PBSC announced on 03/25/2025 enable us to deliver customized IHPO closures, chambers, and hatches directly to our customers. In February, we achieved a 42% increase in total sales compared to February. With the upswing continuing into quarter two, the month of April has reflected a 21% increase in sales when compared to the same month last year. And year to date, we’ve experienced a 169% surge in bit solution sales compared to the same period last year.

That is in the back of a 97 increase of solution sales for the February compared to 02/2024. We are optimistic about sustaining this momentum with a dedicated focus on our SteraMist integrated system, the SIS offerings, along with exciting new initiatives for our custom engineered system. To further sustain growth in our consumable bit solution sales, we will continue to expand our customer outreach through targeted marketing initiatives and strategic partnerships. Additionally, we are committed to educating the market on crucial importance of protective disinfection through SteraMist Pro certified program. In quarter one, we saw a significant increase in the use of our handheld devices.

We welcome several new customers, including a new division of the US Army, a children’s hospital in Philadelphia, additional research universities and quality service providers. The use starting this is expanding within the egg white manufacturing company I referred and referenced during our last call. This company has also established itself as a vulnerable, valuable referral source to us in the food industry and have provided us with essential procedures and protocols enhancing our expertise in this segment. Notably our partnership with AlgaFeed, which successfully tested slight contamination has opened a new aquaculture market for SteriMist IHP. In quarter one, two of our international distributors also added SteriMist products to their customer base.

A major highlight this quarter was the purchase of both surface units and stainless steel carts by an American Canadian eye health company valued at approximately $170,000. We are currently collaborating with them and their qualification procedures as they also acquired our validation service package, which we expect to complete in quarter two. We also expect this health product company to purchase a similar order for a separate location in the short term. We continue our work with a major corporation focused on decontaminating heart monitoring devices. This order valued at approximately 288,000 was received in quarter one with further committed orders in the amount of 45,000 to the project since our last call.

We are currently in the manufacturing phase of the enclosures. Validation service related to this order is expected to be conducted in quarter three of this year. It’s important to highlight that the end of twenty twenty four, we had an open sales log of approximately 877,000. By the end of quarter one or March thirty first of this year, that figure has risen to 1,200,000, and is currently stands at 1,600,000. This increased backlog is not only from our IHP corporate service plans, but it’s also a result of our expanded new service offerings that complement capital equipment purchases.

This includes our new product offering in collaboration with partners for made to order IHP enclosure equipment, and the wins of long term project bids for our custom engineered system known as the CES. I will now provide a brief overview of our financial results for the February compared to the same period last year. Revenue increased to 1,577,000 for the February, which was up from 1,114,000 in the first quarter of twenty twenty four, representing a 42% increase in sales driven by heightened demand for a bit solution, mobile systems, SIS and increased revenue from IHP corporate services. Our product based revenues totaled 1,000,000 in Q1 of twenty twenty five, reflecting a 35% growth compared to Q1 of twenty twenty four. Our service revenues generated 577,000, a 56% increase from the same prior year period.

BIT solution sales reached approximately $300,000 marking nearly a 200% increase from just over a 100,000 in the first quarter of last year. Additionally, technical support for existing customers equipment continue to see a notable increase at 42% indicating that our clients are utilizing our equipment more frequently for their registered operations. Our gross margin as a percentage of sales for the three months ended 03/31/2025 was 60.4% compared to 60.2% in the same prior year period. Operating loss for the quarter was approximately 754,000, an improvement from the operating loss of 1,226,000 in the same quarter last year. Our net loss was approximately $256,000 or 0.01 per basis and diluted share compared to 1,310,000 or 7 percent loss per basic and diluted share in the prior year.

That’s really good. As of 03/31/2025, our financial position consists of cash and cash equivalent of approximately 674,000, working capital of 3,800,000.0 and shareholder equity of 3,800,000.0. We are very focused on prudently managing our working capital. We have made progress on our accounts payable, particularly subsequent to the close of the quarter. Our accounts payable stands at approximately 700,000, lower than the 1,700,000.0 reported for quarter one two thousand and twenty five, which puts us in a good position to exit quarter two with similar cash positions to quarter one.

As mentioned, we anticipate a positive trend in sales throughout the year for BIT solution, equipment services, and custom designs. Quarter two has begun on a strong note, highlighted by other significant wins for SIS platform, totaling over a hundred and 80,000 for a university. Further device purchases by our egg white manufacturing customer and the USDA’s increased usage of SteraMist. Additionally, we have a promising opportunity with the service provider franchise. In quarter one, we welcome one group from Middle Tennessee, followed by two additional providers from this franchise this current quarter.

While still in the early stages of development, we are scheduled to meet with franchise teams next week regarding our SteraPack. We will keep you updated on these developments, but it’s encouraging to see that our targeted marketing initiatives and strategic partnerships are beginning to yield results. With the recent launch of the SIS platform, the arrangement of our custom systems can become a bit complex. To ensure everyone is on the same page, I would like to take this opportunity to clarify our status regarding the three offerings that can be classified as custom or made to order to some extent. The custom engineered system or CES, the hybrid and the SteriMist integrated system or SIS.

We currently have eight active fully operational custom engineered systems, including the previously announced two systems for Merck. And we anticipate their BIT solution orders in the second half of the year. Additionally, we are in negotiations to install the hybrid at another building on the Merck campus, with an estimated value of approximately $300,000. Although the timeline for implementation is still being determined. We are at various stages with four purchase stages systems either already accounted for in revenue or in open bookings. Regarding the full pipeline reported

during our last call, we are actively negotiating $2,000,000 among five potential orders for our CES. We are routinely discussing specific specifications with these five and are highly optimistic about securing these wins. The hybrid currently include two fully installed and operational units. Our initial hybrid previously referred to as a modified environment system has been in use for the past three years, and this customer consistently purchases approximately $50,000 worth of solution annually.

The second system is getting started, while the theory is in the final stages of customer internal approval. We are actively engaging with seven different opportunities for hybrid, each with varying timelines. It’s important to note that this product offering is dependent on and frequently changes during the negotiation process. Otherwise, these companies would likely opt for our CES. As such, it is challenging to provide a precise estimate for the expected outcomes for some of the second opportunities.

The current bids range from approximately $150,000 to $800,000 The SIS platform can be complex as it may involve a combination of efforts with the new partners we’ve discussed over the past few quarters. These could entail providing a fully enclosed system utilizing our technology, or simply the purchase of our capital mobile equipment. The SIS SA along with accompanied services we now provide. Currently, have two installed and operational SIS systems with one more awaiting completion of our customers internal processes, estimated for completion by the end of the year. Additionally, we have five systems pending, either waiting for enclosures to be manufactured or for services from TOMI to be scheduled according to customer timelines.

The pipeline for SIS and SIS SA has shown substantial potential since its recent launch. Although still early to provide concrete numbers with confidence, the five already accounted for in either sales backlogs of point to approximately $950,000. TOMI anticipates this to be a game changer for our brand, keeping pace with industry advancements. Our ongoing communication with enclosure manufacturing companies worldwide reinforces this optimism. We look forward to sharing more formal contracts as the year progresses with even greater developments anticipated in 2026.

Other brief updates just from the past month include the ongoing expansion of Fresenius Kabi across various locations, which I anticipate will be officially announced shortly. We are diligently working on enhancing our sales infrastructure by establishing new distribution channels, recruiting independent representatives, and most importantly, bringing in qualified business developers to effectively manage customer base and support new sales initiatives. These efforts are expected to positively impact our revenue in 2025 and beyond. Additionally, we are actively seeking strong global partners for 2025 and continuing our discussions with those mentioned during our last call. Our focus remains on rebuilding our brand presence in Panama, Nigeria and Israel with new partnerships, as well as establishing a new relationship in Australia and Chile, and adding distributors in Costa Rica and Brazil.

We will continue to capitalize on positive momentum in IHP corporate service deployment, which has generated approximately 633,000 for the year from deployment service jobs alone. The IHP corporate service deployment pipeline currently stands at $1,000,000 in open proposals for 2025. We are excited to announce that we hope to finalize a new partnership with a company we recently engaged with for the first time in quarter three of last year. This partnership would involve contracting the TOMI IHP corporate service team for two separate buildings, servicing them twice a year, and has the potential to make them our highest service customer. Our first service under this arrangement is expected at the May, followed by the second service in July.

We anticipate finalizing our arrangement with this customer and commencing services at the end of the current quarter. In summary, we are encouraged by significant progress TOMI has made in the first quarter of twenty twenty five with substantial increases in total sales and BIP solution sales that showcase the effectiveness of our strategies and product offering. Our ongoing efforts to enhance our sales infrastructure, expand our distribution channels, and establish strategic partnership positions us well for continued growth throughout the year. As we look ahead, we remain committed to advancing the innovations of our SIS platform and custom engineered systems and offer to our impressive customer base and new customers, while also strengthening our presence in key and new markets. As always, we thank all of you for your continued support and belief in TOMI.

I know it’s been a long road, but together, and as always, we will embrace the opportunities that lie ahead. And we look forward to sharing our successes with you in coming quarters. Operator, let’s open the call to questions.

Conference Operator: Certainly. At this time, we will be conducting a question and answer

John, Shareholder: Great job on the quarter. Thanks very much as a shareholder. And it sounds like you’re making tremendous progress and the future looks bright. I’ve got a couple of questions. First first one is, do you have any financial goals for the year 2025 that you can share with us?

Dr. Haldon Shane, CEO and Chairman of the Board, TOMI Environmental Solutions: We know that 2025 is gonna be a great year, John. We’re trying not to go forward and project, but we’re pretty confident that we’re gonna improve on our last year numbers.

John, Shareholder: Okay. Good. And anything, do you anticipate any effects from the tariffs trade policy? Well,

Dr. Haldon Shane, CEO and Chairman of the Board, TOMI Environmental Solutions: you know, it’s it’s hard to tell. Basically, it’s changing daily. We had one minor problem with South Korea where they had a 15% tariff and our distributor got back to us and you know, wanted to split that with us. And, I’m not sure if we we made a decision yet. But, you know, we’ll work with them.

We’re not having any problems with international sales because of the tariffs and I certainly hope that, and today was a very encouraging day, that a lot of this tariff stuff will come to an end shortly or within the next sixty days.

John, Shareholder: Okay. And then, with the government’s recent budget, and staff cuts at various agencies, Do you anticipate that being of any significant problems for TOMI?

Dr. Haldon Shane, CEO and Chairman of the Board, TOMI Environmental Solutions: No, not at all. In fact, I think we’re seeing an increase in the right aspects of the government that utilize our product. There would be doing a lot more critical testing and, studies on everything. And I think that, it it should be this should be good for us, in relationship to filling the government’s needs. And I think that they definitely need our product in all aspects of government for for the best disinfection decontamination.

But from the lab standpoint, I’d say things increasing this year.

John, Shareholder: Okay. And I’m I ask these questions every quarter, just because I know that, they could open up significant new markets for TOMI over the long run. Anything new on food safety?

Dr. Haldon Shane, CEO and Chairman of the Board, TOMI Environmental Solutions: We have, we’re getting flooded with interest and requests for, you know, quotes and, in all aspects. And and our companies, as I mentioned, are very large, and, they seem to like our product and are using it. And I truly believe, that food safety will surpass life sciences, in time. And, we’re even getting requests from researchers at universities that want to use our product, and test it for food safety in various areas, you know, specific, you know, further than what I mentioned on the call. Okay.

John, Shareholder: Has anything materialized as far as either number of requests or progress on the use of SteraMist for prevention of bird flu transmission?

Dr. Haldon Shane, CEO and Chairman of the Board, TOMI Environmental Solutions: Nothing that I’m recently aware of. I mean, we do have remediators and professional cleaners that are using our product for that. But, you know, governments, you know, they’re I believe that treating it, you know, just as a flu and not overcompensating for it, which, you know, is fine. But, there’s an increase in individuals that wanna use it for disinfection, decontamination for the treatment of bird flu and other related viruses.

John, Shareholder: Okay. And then anything anything any new developments on Ceramist as an ethylene oxide replacement?

Dr. Haldon Shane, CEO and Chairman of the Board, TOMI Environmental Solutions: We have and we are in talks with companies that would replace ethylene oxide with Ceramist and, they are we are negotiating in those space.

John, Shareholder: Was the, the order that you got for treating pacemakers by the medical device manufacturer, was that used in replacement of ethylene oxide or just for another layer?

Dr. Haldon Shane, CEO and Chairman of the Board, TOMI Environmental Solutions: Do you know the answer to that?

Nick Jennings, Interim CFO, TOMI Environmental Solutions: Certainly. So that one company is using us for disinfecting their heart monitoring devices. What was stated is we think it’ll be a good foot in the door to work on our five ten to get fully registered as a medical device disinfection product. And so encompassing IHP into a full enclosed chamber will lead to an easier way in to replace ethylene oxide. So with time, I absolutely do think so.

That one particular win was not in replacement. We actually helped them develop an entire new, protocol for their use.

Dr. Haldon Shane, CEO and Chairman of the Board, TOMI Environmental Solutions: Yeah.

John, Shareholder: Okay. And then, you had mentioned, again, it’s critical that, TOMI continues to educate the market, with, information about your superior product. Is there have you developed, any new ways to try to educate the market or to spread the word?

Dr. Haldon Shane, CEO and Chairman of the Board, TOMI Environmental Solutions: Yes,

Nick Jennings, Interim CFO, TOMI Environmental Solutions: of course. So, did. We launched the that’s what the SteraMist Pro certified program is all about, not to have it just be for our service providers, but our entire customer base and our distributors and their representatives as well. So, it is held information on a learning management system, which has ongoing training, protocol developments, regardless of the segment or industry they find themselves in. And we update it routinely and weekly, so it creates more of an education platform and communication outlet, to really get involved in using SteraMist and getting out there.

So it is newly developed. We have moved pretty quickly on it. I expect real results coming from it in terms of the amount of users come next year. But it has shown, already some results, especially around usage of the technology and different segments.

John, Shareholder: Okay. And is the didn’t wasn’t sure if I caught it right, but is the SIS system being used by the heart monitor company to, treat devices, or is that another, form of, hybrid or CES?

Nick Jennings, Interim CFO, TOMI Environmental Solutions: No. You’re you’re absolutely right. It’s the the SIS standalone. So they did purchase the Capital Mobile piece of equipment, which will integrate within the chamber that we’re designing with our partners.

John, Shareholder: Okay. And it might be useful to the shareholders and listeners just to describe how the SIS actually works as far as sterilizing equipment like the heart monitors. Not just a I’m assuming it’s not just a stick it in the container and push the button and that’s it?

Nick Jennings, Interim CFO, TOMI Environmental Solutions: It is, actually. It would be very similar to our environment system. So the key aspect to the technology is it all runs off the same science. So, in essence, it’s just the amount of applicators that they would require. The standalone sells the applicators, which houses the cold plasma arc, the basis of our technology, separately because they can use it elsewhere within the facility.

So, trying to promote more use out of machines where they can connect it to the enclosure and then also use it on a handheld spray should they want. So, it’s all encompassing the unit itself very similar to our building, but only houses one applicator. So, for smaller areas.

John, Shareholder: Okay. And this is just speculate me speculating, but is there a use or need for something like this in

Dr. Haldon Shane, CEO and Chairman of the Board, TOMI Environmental Solutions: hospitals?

Nick Jennings, Interim CFO, TOMI Environmental Solutions: Yes. I do believe there would be. We sell to our SteraBox, which is something we’re marketing towards hospitals with the stand alone. It’s a new initiative, but it’s it’s getting put out there. But, yes, it would be a good unit for

John, Shareholder: Alright. Good. Well, that’s all of my questions. Thanks very much. Good good job.

By great job by the, by the whole team. Thank you.

Dr. Haldon Shane, CEO and Chairman of the Board, TOMI Environmental Solutions: Okay. Thank you. Thank you for your

Conference Operator: Your next question is from Jeff Ficelli, Ficelli Capital.

Dr. Haldon Shane, CEO and Chairman of the Board, TOMI Environmental Solutions: Hey, guys. Thanks for taking the question. Just a quick one here. Solution sales, they’ve been pretty strong as of late. Can we just provide a

John, Shareholder: bit more color there, kind

Dr. Haldon Shane, CEO and Chairman of the Board, TOMI Environmental Solutions: of background on what’s driving that? Sure. So in the model itself has always been this razor razor blade model where we get technology out being the razor and we sell a lot of razor blades. And, you know, it’s taken a while to get the razors in the hands of the right people that constantly use razors. And we have recently gotten large orders from people that are currently using our products more.

And we anticipate this to increase going forward in the year to come. So, you know, we’re very, very thrilled about the usage and about the increase in solutions. And, you know, we’re we’re just constantly working at selling more razors out there, more technology so, they can utilize more of our solution or blades. Got it. Great.

Thank you very much. That’s all for me.

John, Shareholder: Sure. Sure.

Conference Operator: Once again, if you would like to ask a question, please press 1. We have reached the end of the question and answer session, and I will now turn the call over to doctor Shane for closing remarks.

John, Shareholder: Well, I wanna thank you both

Dr. Haldon Shane, CEO and Chairman of the Board, TOMI Environmental Solutions: for joining us today wherever you might be in the world and, look forward to presenting our next quarter results. And, look forward to a great year at and, hope everybody has a wonderful day. And I wanna thank my TOMI team for all the hard work that they’ve done. Thank you. Operator, you can Thank

Conference Operator: you. This concludes today’s conference and you may disconnect your lines at this time. Thank you for your participation.

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