Categories: News

Applied UV Announces Third Quarter 2023 Financial Results, Revenue Increases to $11.4 Million, Adjusted EBITDA (non-GAAP) Improves 30.8% Year Over Year

NEW YORK, NY, Nov. 17, 2023 (GLOBE NEWSWIRE) — via 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

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

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

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.

Net Loss

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.

Forward-Looking Statements

The information contained herein may contain “forward‐looking statements.” Forward‐looking statements reflect the current view about future events. When used in this press release, the words “anticipate,” “believe,” “estimate,” “expect,” “future,” “intend,” “plan,” or the negative of these terms and similar expressions, as they relate to us or our management, identify forward‐looking statements. Such statements include, but are not limited to, statements contained in this press release relating to the view of management of Applied UV concerning the Company’s preliminary third quarter 2023 financial results, its business strategy, future operating results and liquidity and capital resources outlook. Forward‐looking statements are based on the Company’s current expectations and assumptions regarding its business, the economy and other future conditions. Because forward–looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. The Company’s actual results may differ materially from those contemplated by the forward‐looking statements. They are neither statements of historical fact nor guarantees of assurance of future performance. We caution you therefore against relying on any of these forward‐looking statements. Factors or events that could cause the Company’s actual results to differ may emerge from time to time, and it is not possible for the Company to predict all of them. The Company cannot guarantee future results, levels of activity, performance, or achievements. Except as required by applicable law, including the securities laws of the United States, the Company does not intend to update any of the forward‐looking statements. References and links to websites have been provided as a convenience, and the information contained on such websites is not incorporated by reference into this press release.

Applied UV, Inc. and Subsidiaries 
Unaudited Condensed Interim Consolidated Statements of Operations
For the Three and Nine Months Ended September 30, 2023 and 2022
                                 
    For the Three Months Ended September 30,   For the Nine Months Ended September 30,
    2023   2022   2023   2022
Net Sales   $ 11,446,048     $ 5,875,611     $ 32,944,217     $ 15,139,347  
Cost of Goods Sold     8,790,764       5,036,997       25,956,853       11,847,842  
Gross Profit     2,655,284       838,614       6,987,364       3,291,505  
                                 
Operating Expenses                                
Research and development     91,085       93,522       460,588       234,885  
Selling General and Administrative Expenses     5,013,988       3,505,097       15,200,486       10,637,538  
Loss on impairment of goodwill and intangibles     —         —         —         1,138,203  
Total Operating Expenses     5,105,073       3,598,619       15,661,074       12,010,626  
Operating Loss     (2,449,789 )     (2,760,005 )     (8,673,710 )     (8,719,121 )
                                 
Other Income (Expense)                                

Change in Fair Market Value of Warrant Liability     1,206       34,804       2,124       46,521  
Interest expense     (558,268 )     (43,037 )     (1,434,329 )     (96,113 )
Gain (Loss) on change in Fair Market Value of Contingent Consideration     434,000       —         1       (240,000 )
Gain on Settlement of Contingent Consideration (Note 2)     —         —         —         1,700,000  
Other Income     —         67,765       —         69,713  
Total Other Income (Expense)     (123,062 )     59,532       (1,432,204 )     1,480,121  
                                 
Loss Before Provision for Income Taxes     (2,572,851 )     (2,700,473 )     (10,105,914 )     (7,239,000 )
Benefit from Income Taxes     —         —         —         —    
Net Loss   $ (2,572,851 )   $ (2,700,473 )   $ (10,105,914 )   $ (7,239,000 )
                                 
Net Loss attributable to common stockholders:                                
Dividends to preferred shareholders     (424,750 )     (362,250 )     (1,194,231 )     (1,086,750 )
Net Loss attributable to common stockholders     (2,997,601 )     (3,062,723 )     (11,300,145 )     (8,325,750 )
                                 
Basic and Diluted Loss Per Common Share   $ (0.32 )   $ (1.21 )   $ (1.95 )   $ (3.26 )
Weighted Average Shares Outstanding – basic and diluted     9,351,478       2,531,219       5,794,689       2,550,272  

Applied UV, Inc. and Subsidiaries
Unaudited Condensed Consolidated Balance Sheets
As of September 30, 2023 and December 31, 2022
                 
    September 30,   December 31.
    2023   2022
Assets        
Current Assets                
Cash and cash equivalents   $ 1,546,911     $ 2,734,485  
Accounts receivable, net of allowance for doubtful accounts     6,126,692       1,508,239  
Costs and estimated earnings in excess of billings     2,883,057       1,306,762  
Inventory, net     7,570,331       5,508,086  
Vendor deposits     1,176,065       75,548  
Prepaid expense and other current assets     2,064,870       1,187,223  
Total Current Assets     21,367,926       12,320,343  
                 
Property and equipment, net of accumulated depreciation     1,250,350       1,133,468  
Other assets     431,500       153,000  
Goodwill     17,809,235       3,722,077  
Other intangible assets, net of accumulated amortization     27,334,870       11,354,430  
Right of use assets     3,396,751       4,044,109  
Total Assets   $ 71,590,632     $ 32,727,427  
Liabilities, Redeemable Preferred Stock and Stockholders’ Equity        
Current Liabilities        
Accounts payable and accrued expenses   $ 10,278,076     $ 2,982,760  
Contingent consideration     18,375,672       —    
Deferred revenue     6,113,192       4,730,299  
Due to landlord (Note 2)     281,123       229,234  
Warrant liability     7,863       9,987  
Financing lease obligations     42,445       33,712  
Operating lease liability     1,739,092       1,437,308  
Notes payable, net     5,136,610       2,098,685  
Total Current Liabilities     41,974,073       11,521,985  
Long-Term Liabilities                
Due to landlord – less current portion (Note 2)     174,938       393,230  
Notes payable, net – less current portion     4,810,922       765,144  
Financing lease obligations – less current portion     143,575       158,070  
Operating lease liability – less current portion     1,731,923       2,655,103  
Total Long-Term Liabilities     6,861,358       3,971,547  
Total Liabilities     48,835,431       15,493,532  
                 
Redeemable Preferred Stock                
Preferred Stock, Series B Cumulative Perpetual, $0.0001 par value, 1,250,000 shares authorized, 1,250,000 shares issued and outstanding as of September 30, 2023 and no shares issued and outstanding as of December 31, 2022     3,712,500       —    
Preferred Stock, Series C Cumulative Perpetual, $0.0001 par value, 2,500,000 shares authorized, 399,996 shares issued and outstanding as of September 30, 2023 and no shares issued and outstanding as of December 31, 2022     1,063,989       —    
Total Redeemable Preferred Stock     4,776,489       —    
Equity                
Preferred Stock, Series A Cumulative Perpetual, $0.0001 par value, 1,250,000 shares authorized, 552,000 shares issued and outstanding as of September 30, 2023 and December 31, 2022     55       55  
Preferred Stock, Series X, $0.0001 par value, 10,000 shares authorized, 10,000 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively     1       1  
Common Stock $0.0001 par value, 150,000,000 shares authorized 9,872,228 shares issued and 9,849,531 outstanding as of September 30, 2023 and 2,735,290 shares issued and 2,712,593 outstanding as of December 31, 2022, respectively     987       274  
Additional paid-in capital     57,665,013       45,620,764  
Treasury stock at cost, 22,697, respectively     (149,686 )     (149,686 )
Accumulated deficit     (39,537,658 )     (28,237,513 )
Total Equity     17,978,712       17,233,895  
Total Liabilities, Redeemable Preferred Stock and Stockholders’ Equity   $ 71,590,632     $ 32,727,427  

Applied UV, Inc. and Subsidiaries
Condensed Interim Consolidated Statements of Cash Flows
For the Nine Months Ended September 30, 2023 and 2022
                 
    2023   2022
Cash flows from Operating Activities                
Net Loss   $ (10,105,914     $ (7,239,000 )
Adjustments to Reconcile Net Loss to Net Cash Used in Operating Activities                
Stock based compensation     616,660         559,980  
Bad debt (recovery) expense     (59,839       94,714  
Change in fair market value of warrant liability     (2,124 )       (46,521 )
Change in fair market value of contingent consideration     (1 )       240,000  
Gain on settlement of contingent consideration     —           (1,700,000 )
Loss on impairment of goodwill and intangible assets     —           1,138,203  
Amortization of right-of-use asset     647,358         834,889  
Depreciation and amortization     2,187,321         1,484,968  
Amortization of debt discount     617,664         53,646  
Changes in operating assets and liabilities, net of effects of acquisitions:                
Accounts receivable     (2,822,579       (103,343 )
Cost and estimated earnings excess of billings     (1,042,657       (234,869 )
Inventory     1,948,852         (2,612,773 )
Vendor deposits     (724,845       697,558  
Prepaid expenses and other current assets     (146,197       (161,797 )
Accounts payable and accrued expenses     3,112,862         582,297  
Other assets     (253,681          
Billings in excess of costs and earnings on uncompleted contracts     —           (1,254,496 )
Deferred revenue     (915,205       1,151,496  
Due to landlord     (279,515       (138,724 )
Operating lease payments     (621,396       (819,828 )
Net Cash Used in Operating Activities     (7,843,235       (7,473,600 )
                 
Cash Flows From Investing Activities                
Cash paid for patent costs     (66,023       (682 )
Purchase of machinery and equipment     (248,319       (46,196 )
Acquisitions, net of cash acquired (Note 2)     (4,115,709       (10 )
Payments on notes payable     (166,262       (41,730
Net Cash Used in Investing Activities     (4,596,313       (88,618 )
                 
Cash Flows From Financing Activities                
Payments on financing leases     (30,994       (5,269 )
Shares repurchased     —           (149,686 )
Dividends to preferred shareholders     (769,481       (1,086,750 )
Proceeds from equity raises, net     6,630,799         1,092,000  
Proceeds from note payable, net     5,421,650         —    
Net Cash Provided by (Used in) Financing Activities     11,251,974         (149,705
                 
Net Decrease in Cash and equivalents     (1,187,574 )       (7,711,923 )
Cash and cash equivalents at January 1,     2,734,485         8,768,156  
Cash and cash equivalents at September 30,   $ 1,546,911       $ 1,056,233  
                 
Supplemental Disclosures of Cash Flow Information:                
Cash paid during the year for:                
Interest   $ 642,877       $ 101,365  
Supplemental Non-Cash Disclosures of Investing and Financing Activities                
Conversion of debt into common stock   $ 767,500       $ —    
Recognition of right of use asset and corresponding lease liability   $ 563,315       $ 1,380,658  
Accrued dividends   $ 424,750       $  
Issuance of note payable for payment of prepaid expense   $ 279,347       $ 318,833  

For Additional Company Information:

Applied UV, Inc.
Max Munn
Applied UV Founder, CEO & Director
Max.munn@applieduvinc.com    

Investor Relations Contact:
TraDigital IR
Kevin McGrath
+1-646-418-7002
kevin@tradigitalir.com   

Staff

Recent Posts

Steven T. Boyd Wins Disruptive Entrepreneur 2024 Gold Globee(R) Award

Honoring a longtime commitment to price transparency, better patient care and pharmacy savingsNatchitoches, Louisiana--(Newsfile Corp.…

2 hours ago

SpendMend’s Trulla Software Platform Chosen to Optimize Pharmacy Procurement at Froedtert Health

GRAND RAPIDS, MI / ACCESSWIRE / June 13, 2024 / SpendMend, a leading provider of…

2 hours ago

Moderna Announces Positive Phase 3 Efficacy Data for mRNA-1283, the Company’s Next Generation COVID-19 Vaccine

mRNA-1283 met its primary vaccine efficacy endpoint in a Phase 3 trial, demonstrating non-inferior vaccine…

2 hours ago