SenesTech, Inc.
Q4 2020 Earnings Call Transcript

Published: 25 Mar 2021

[Operator:]

Good day, and welcome to the SenesTech Inc Reports Fourth Quarter and Fiscal Year 2020 Financial Results Conference Call. All participants will be in listen-only mode. After today's presentation, there will be an opportunity to ask question . Please note this event is being recorded. I would now like to turn the conference over to Robert Blum with Lytham Partners. Please go ahead, sir.

[Robert Blum:]

All right. Thank you very much, Matt, and thank you all for joining us today to discuss SenesTech’s fourth quarter and fiscal year 2020 financial results for the period ended December 31, 2020. With us on the call represent the Company today Mr. Ken Siegel, SenesTech’s Chief Executive Officer; and Mr. Tom Chesterman, the Company’s Chief Financial Officer. At the conclusion of today’s prepared remarks, we will open the call for a question-and-answer session.

[Ken Siegel:]

Thanks, Robert. Good afternoon and thank you all for joining us today. As you saw in the press release we issued after the close, we made good progress in 2020, and building awareness and adoption of ContraPest as evidenced by 97% year-over-year increase in revenue. We’re obviously still operating from a relatively small revenue base, but we are making progress. While the pandemic has created hurdles for us in terms of visiting with potential customers face-to-face, we did manage to make progress on the six key areas of focus we discussed in recent calls. As a reminder, those include obtaining compelling real world data, focusing our sales and marketing efforts towards high value targets, launching an e-commerce platform, repositioning ContraPest as part of an overall integrated pest management strategy, focusing our R&D efforts on product improvement and enhancements and maintaining fiscal discipline.

[Tom Chesterman:]

Thank you, Ken. As a reminder to all, if you have not yet seen our earnings press release, you can get it on our website in the Investor Relations section. Also, we expect to be filing our annual report on Form 10-K in a day or two. So this is just the summary. Revenue for the year was approximately $282,000 compared to approximately $143,000 in 2019, an increase of 97%. This continues our trend of growth, fourth quarter 2021 over four quarters 2020 and year-over- year. The fourth quarter revenue was $97,000, which did include $24,000 of grant revenue received. However, this is not the $660,000 PPP loan. We are still carrying that as a loan until the forgiveness for which we apply is granted hopefully by the end of April. We do not as most of you may recall provide forward-looking guidance. I will say though, that so far, the first quarter looks pleasing from our perspective. Revenues continue to be a mix of distributor sales, PMP, direct and direct to consumer. I should note that we can't really always tell the difference between PMP direct and direct to consumer as PMPs order from both the website directly as well as from distributors.

[Operator:]

We will now begin the question-and-answer session. Our first question will come from Amit Dayal with H.C. Wainwright. Please go ahead.

[Amit Dayal:]

With respect to the commercialization strategy going forward now, it looks like you have an opportunity on the agricultural side as well as in the urban front. Where the focus is going to be and what sort of strategies are implementing, if you could provide any color on that that would be helpful? Thank you.

[Ken Siegel:]

Key focus geographically is going to be California, particularly with the adoption of the ecosystem Protection Act. That's one of the reasons why we've doubled up on the sales team there, and we're actually looking to recruit additional people. Similarly, California because the municipalities are one of the areas that are subject to the limitations of the statute will be a primary focus. So, we're currently reaching out to as many municipalities as we can, as you might imagine given the situation with COVID in California, we're still having difficulties scheduled and scheduling an in-person meetings. So as soon as that begins to crack open, we'll have our people out in the field meeting with the various municipalities. Agriculture is broader. Again, there's significant potential in California because of the law and because we had positive results in the industry. But we're also looking in the southeast and we're also moving up the food chain. As I mentioned before, essentially, the critical issue in the research we did wasn't necessarily that it involved poultry, wasn't necessarily that it involved grain necessarily that has involved grain, that has involved eggs, or chicks. It was the grain. It was the feed. And if you think about it, that grain makes its way through the entire food chain. So, we're looking not only at farm, we're actually looking at as the grain is aggregated in storage, in transport, working all the way into retail. So, right now, everything is critical area of our focus. The other way that we're approaching it though is, we've now begun to outreach to major regional distributors of the price of the product, and we're tending to stay away from the national distributors because we really can't get their attention. We can't get the shelf space. And so, we're partnering up with the regional distributors to get access to not only them, but to their PMPs for using the data that we've gotten, both from the urban markets and from the poultry studies to directly engage with the PMPs. We've created new handout collateral that they could use to market to their own customers. So, the idea here is that, we're going to attempt to leverage the existing system to get people out there and sell them. So, there are multiple different efforts, but really with a high level of focus on the areas where we think we're most likely to generate revenue in 2021.

[Amit Dayal:]

Do you think you could be more aggressive as a sort of your progressive in terms of your marketing efforts now that you have a pretty strong balance sheet?

[Ken Siegel:]

Absolutely, part of this is -- part of the aggression simply is now being able to get people out there and being able to physically meet. The other piece is we can ramp-up advertising and we can look into different channels, et cetera. But the key piece of this thing is, as COVID abates as now that we are well-armed with cash, we think that, we can be very, pretty strategic in how we deploy the money to best drive sales throughout the year.

[Amit Dayal:]

All right, understood. And maybe this one for Tom. The other increase, I mean, it's still a small base, but its online contribution, online e-commerce contribution or was there something else that drove the top-line growth in 2020?

[Ken Siegel:]

Well, no. It's not really just the online portal. And as I mentioned, the online portal is a bit of a mix between direct-to-consumer and pest management professionals who prefer to order direct instead of working through distributors. So, we can't really tell as precisely which segment of the buying population it is. But we've had a lot of direct sales where our sales force is beginning to see a lot of action in terms of direct orders. And now we are continuing to see normal orders growing from the various sundry distributors that we have, as Ken mentioned, a little bit more biased towards regional distributors lately, but that channel is certainly increasing.

[Amit Dayal:]

Are there other -- is it just more orders and more distributors on order side?

[Ken Siegel:]

We are significantly increasing the number of customers that are ordering. There are some specific PMPs that we can track anecdotally, that we know that they were increasing the deployment into other customers as they see the success of ContaPest. So it's a mix of that.

[Amit Dayal:]

And Tom can you remind us what the share count is after the recent financings and the warrant exercise?

[Tom Chesterman:]

On a pro forma basis using all of those different, all the financings that we had in the first quarter, I think the share count comes out at approximately 12.2 million.

[Amit Dayal:]

Okay. Thank you. Just one last one from me, I guess, in terms of milestones for 2021 what should you be looking for? Is it just potential execution against the data that we have produced and now to draw in the capital? Are there any other milestones that we should keep in mind?

[Ken Siegel:]

The key milestone really is execution. Maybe we should be looking about for revenue growth discussion of backlog, and then we'll update you as to the progress of the various initiatives that we have going on with EPA, which we'll start seeing in subsequent quarters. So, the product improvement and expansions is running through EPA, but the critical milestones is, how we do over the next couple of quarters in revenue.

[Amit Dayal:]

Okay. That’s all I have, appreciate it.

[Ken Siegel:]

Terrific.

[Operator:]

This concludes our question and answer session. I would like to turn the conference back over to Ken Siegel for any closing remarks.

[Ken Siegel:]

Great. So again, thank all of you for joining us this afternoon. Frankly, I hope the sense that you got from the call is, is we're up, we're upbeat, we're optimistic about the year the various things that we've taken close to a year and a half to put in place are finally clicking. And you know, we've got an energized sales team, we've got an energized marketing function and we have cash in the bank, so that we're not constantly worrying about that thing. So again, hopefully you'll be hearing good things from us over the next several quarters. Look forward to talking to you again at the end of Q1. Thanks all.

[Operator:]

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.