• Revenue Growth: 50% for the quarter and 62% year to date.
• First Six Months Revenue: $874,000 compared to $538,000 in 2023.
• Evolve Product Line Sales: 59% of total sales.
• Gross Margin: 54% for the quarter, up from 47% last year; June gross margin at 67%.
• Adjusted EBITDA: Reduced to about $500,000 a month from over $1 million historically.

• Warning! GuruFocus has detected 4 Warning Signs with SNES.

Release Date: August 08, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• SenesTech Inc (NASDAQ:SNES) reported a record top-line sales growth of 62% year-to-date compared to the same period in 2023.
• The Evolve product line, launched at the beginning of the year, now accounts for 59% of total sales and is approved for sale in 44 states.
• The company has successfully pivoted to a distribution model, targeting larger orders and reducing selling costs.
• SenesTech Inc (NASDAQ:SNES) has active agreements in 11 countries, expanding its international market presence.
• Gross margin improved significantly, reaching a record high of 67% in June, indicating better cost management and profitability potential.

Negative Points

• Despite the growth, the company is still not profitable and is working towards achieving cash flow breakeven next year.
• The transition to profitability is heavily reliant on securing large orders from major retailers, which are not guaranteed.
• The company faces challenges in penetrating the retail market due to long buying decision cycles.
• There is a dependency on state approvals for product sales, which can delay market entry.
• The company is negotiating a new facility lease, which could increase operational costs if not managed carefully.

Q & A Highlights

Q: Could you comment on any recent large city orders? A: Joel Fruendt, Chief Executive Officer, mentioned that SenesTech recently received a large order for Evolve from Hartford, Connecticut. They also expect an order from Newark, New Jersey, and a distributor has placed a large order for Boston area municipalities.

Q: Can you elaborate on your advances in packaging? A: Joel Fruendt explained that Evolve for rats is offered in various sizes, including pouches and pails. They are transitioning to pouches to reduce plastic usage, launching a 6-pound economy size pouch that reduces plastic packaging by 87%.

Q: Can you elaborate on one or two big orders that could take you to profitability? A: Joel Fruendt provided examples, such as warehouse stores ordering one pail per store, potentially generating $5 million in revenue. Big box retailers ordering one case per month could result in an annual rate of over $4 million. They are pitching to 23 multi-location customers, representing over 50,000 locations.

Q: Why don't we see results from these retailers and other deals you have announced? A: Joel Fruendt explained that each buyer has specific processes and buying patterns. For example, Ace took months to finalize their purchasing system, while Costco plans six months in advance. Walmart starts with small amounts and expands based on demand. Working with manufacturers' rep agencies is crucial to understanding these patterns.

Q: What are the financial highlights for the second quarter of 2024? A: Thomas Chesterman, Chief Financial Officer, reported a 50% revenue growth for the quarter and 62% year-to-date. The Evolve product line, launched at the beginning of the year, represents 59% of total sales. Gross margin improved to 54% for the quarter, with June reaching a record high of 67%.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.