Applied UV Inc (AUVI) 2023 Q1 法說會逐字稿

Good day. I would like to welcome everyone to the Q1 2023 Applied UV earnings conference call. (Operator Instructions) As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Brett Maas, Investor Relations from Hayden IR. Thank you. You may begin.

再會。歡迎大家參加 2023 年第一季度 Applied UV 收益電話會議。 （操作員指示）謹此提醒，本次會議正在錄製中。現在我很高興向您介紹主持人，Hayden IR 投資者關係部門的 Brett Maas。謝謝。你可以開始了。

Thank you. Once again, welcome to Applied UV's Q1 2023 earnings call. With me on the call today are Max Munn, CEO, President, and Director; and Mike Riccio, Chief Financial Officer. As a reminder, all materials for today's live presentation are available on the company's Investor Relations website at applieduvinc.com. Before we begin, please take a moment to read the forward-looking statements in our earnings press release.

謝謝。再次歡迎參加 Applied UV 2023 年第一季度財報電話會議。今天與我一起參加電話會議的是首席執行官、總裁兼董事 Max Munn；和首席財務官邁克·里奇奧(Mike Riccio)。謹此提醒，今天現場演示的所有材料均可在公司投資者關係網站 Applieduvinc.com 上獲取。在我們開始之前，請花點時間閱讀我們的收益新聞稿中的前瞻性陳述。

During today's call, we'll make certain predictive statements that reflect our current views about future performance and financial results. We base these statements and certain assumptions and expectations on future events that are subject to risks and uncertainties. Our most recent Form 10-K lists some of the most important risk factors that could cause actual results to differ our predictions. With that, I'll turn the call over to Max Munn. Max, the floor is yours.

在今天的電話會議中，我們將做出某些預測性陳述，反映我們當前對未來業績和財務業績的看法。我們的這些陳述以及某些假設和預期是基於存在風險和不確定性的未來事件。我們最新的 10-K 表格列出了一些可能導致實際結果與我們的預測不同的最重要的風險因素。說完，我會把電話轉給馬克斯·穆恩。麥克斯，地板是你的了。

Thanks, Brett. Good morning, everyone. Our Q1 2023 financial results included revenues of $10.7 million, up 217% over the prior year quarter, with our hospitality segment growing 332%, and our disinfection/healthy building technologies segment growing 135%. As a reminder, Applied UV has three portable operating segments -- reportable operating segments, the design manufacture and distribution of disinfecting pathogen elimination systems for use in food preservation, healthcare, hospitality, education, and public spaces, as well as cannabis correctional facilities, commercial, municipal, and residential markets.

謝謝，布雷特。大家，早安。我們 2023 年第一季度的財務業績包括收入 1,070 萬美元，比上年同期增長 217%，其中酒店業務增長 332%，消毒/健康建築技術業務增長 135%。提醒一下，Applied UV 擁有三個便攜式運營部門——可報告運營部門、設計、製造和分銷用於食品保存、醫療保健、酒店、教育和公共場所的消毒病原體消除系統，以及大麻懲教設施，商業、市政和住宅市場。

The disinfection/healthy building technologies segment and the manufacture of fine mirrors and custom furniture, specifically for the hospitality industry or hospitality segment. And lastly, the corporate segment, which includes expenses related primarily to corporate governance such as Board fees, legal expenses, audit fees, executive management and listing costs.

消毒/健康建築技術領域以及精美鏡子和定製家具的製造，專門針對酒店業或酒店領域。最後是公司部門，包括主要與公司治理相關的費用，例如董事會費用、法律費用、審計費用、執行管理費用和上市費用。

Now I'd like to take a deeper dive and review our hospitality segment. In hospitality, MunnWorks continues its pre-pandemic growth and the industry continues to show strong growth fueled by the post-pandemic travel surge. This market growth continues to heighten the need for hotels to make capital improvements to facilities to maintain their franchise flag. We've had several high-profile hotel operators placing orders with us in the million -- multimillion dollar area.

現在我想更深入地探討並回顧一下我們的酒店業務部門。在酒店業，MunnWorks 繼續保持大流行前的增長，並且在大流行後旅行激增的推動下，該行業繼續表現出強勁的增長。這種市場增長繼續加大了酒店對設施進行資本改進以維持其特許經營旗幟的需求。已經有幾家知名酒店運營商向我們下了數百萬至數百萬美元的訂單。

The rising demand for US based manufacturing, which eliminates the 25% tariff on China manufactured goods as well as 6.5% duties as well as mitigating supply chain disruption, shortening times to delivery of goods is both driving sales and what we anticipate to be margin expansion, much of which we spoke about in our Q4 call. We expect this margin expansion and sales growth into Q2 and to continue to improve the remainder of the year. Our sales backlog for hospitality segment is approximately $10 million at this point.

對美國製造業的需求不斷增長，取消了對中國製成品徵收的 25% 關稅和 6.5% 關稅，並減輕了供應鏈中斷，縮短了交貨時間，這既推動了銷售，也推動了我們預期的利潤率擴張，我們在第四季度的電話會議中談到了其中的大部分內容。我們預計第二季度的利潤率擴張和銷售增長將在今年剩餘時間內繼續改善。目前，我們酒店業部門的銷售積壓約為 1000 萬美元。

Now let me discuss the disinfection/healthy building technologies segment of our business. The UV disinfection market is expected to reach $9 billion in less than four years. The CDC expects that one in 25 patients have at least one hospital acquired infection annually, totaling over 3 million serious infections and 100,000 deaths will occur each year.

現在讓我討論一下我們業務的消毒/健康建築技術部分。預計不到四年，紫外線消毒市場將達到 90 億美元。 CDC預計，每年每25名患者中就有1人至少在一家醫院獲得感染，每年總計將有超過300萬例嚴重感染，10萬人死亡。

This amounts to losses from contagious infection pathogens and virus, which will cost the US economy more than $270 billion per year and includes lost productivity due to absenteeism. Our solutions help to keep people safe and healthy as well as protect and extend the shelf life of high-value agricultural products.

這相當於傳染性感染病原體和病毒造成的損失，每年將給美國經濟造成超過 2700 億美元的損失，其中包括因缺勤造成的生產力損失。我們的解決方案有助於保障人們的安全和健康，並保護和延長高價值農產品的保質期。

Dr. Maximo Cullen, Chief Economist for Food and Agriculture for the UN recently spoke about the impact that food spoilage has on the world economy in the form of $400 billion a year in lost fruit and vegetables, which equates to approximately 31% of those crops grown and as lost in the supply chain.

聯合國糧食和農業首席經濟學家馬克西莫·卡倫 (Maximo Cullen) 博士最近談到了食品腐敗對世界經濟的影響，每年損失的水果和蔬菜損失達 4000 億美元，相當於這些農作物的約 31%在供應鏈中成長和消失。

Because we are leaders in photo catalytic oxidation, PCO, which is a proven technology we co-developed for use by NASA, we plan to leverage our leadership position in post-harvest food security, where our Airocide product line is already demonstrating the reduction of loss, improving yield, of course, high value food, fruit, and berries with global -- while we're working with global companies, such as Del Monte, Dole, Whole Foods, and others.

由於我們是光催化氧化 (PCO) 領域的領導者，PCO 是我們與 NASA 共同開發的一項經過驗證的技術，因此我們計劃利用我們在收穫後糧食安全方面的領導地位，我們的 Airocide 產品線已經證明可以減少損失，提高產量，當然，還有全球的高價值食品、水果和漿果——同時我們正在與德爾蒙特、都樂、全食等跨國公司合作。

With the help of Canon Virginia, we expect to introduce a PCO-based air purification system that would be incorporated into shipping containers, long-haul refrigerated trucks, and distribution centers and is currently underway. And we expect a major product launch in early Q4 of this year. Our primary focus will be centered on food security and storage and the company plans to invest heavily in post-harvest facilities, including logistics, transportation, and distribution, which will improve the yield on high value food and vegetables, cannabis, wine storage, all of which will be the largest area of growth for our company.

在佳能弗吉尼亞公司的幫助下，我們預計將推出基於 PCO 的空氣淨化系統，該系統將被納入集裝箱、長途冷藏卡車和配送中心，目前正在進行中。我們預計主要產品將在今年第四季度初推出。我們的主要重點將集中在糧食安全和儲存上，公司計劃大力投資收穫後設施，包括物流、運輸和分銷，這將提高高價值食品和蔬菜、大麻、葡萄酒儲存等的產量其中將是我們公司最大的增長領域。

Also, with the urgency for improvements to improving indoor air quality within HVAC systems post-pandemic, is rapidly expanding. Our acquisition of PURO Lighting, which announced a partnership with Johnson Controls and USHIO and a leading research institution to test the effectiveness and efficacy of our patented Far-UV 222 nanometer technology, which upon conclusion in late Q3, early Q4, will drive adoption of our unique systems.

此外，隨著大流行後改善暖通空調系統室內空氣質量的緊迫性正在迅速擴大。我們收購了 PURO Lighting，該公司宣布與江森自控、USHIO 以及一家領先的研究機構建立合作夥伴關係，以測試我們獲得專利的遠紫外線 222 納米技術的有效性和功效，該技術將於第三季度末、第四季度初結束，這將推動採用我們獨特的系統。

Our disinfection/healthy building technologies segment reported 4.6 million for the quarter, largely attributed to the acquisition of PURO Lighting and LED Supply Co. We're already enjoying the cross market selling of our hard case goods, part of our hospitality business into projects bid by LED supply. In fact, it is approximately $2 million worth of mirrors that we have confirmation on. We'll continue to work towards pathogen elimination as an option in both freestanding and to be engineered into hotel guestroom furniture. It's a great cross-selling opportunity.

我們的消毒/健康建築技術部門本季度報告了 460 萬美元，這主要歸功於對 PURO Lighting 和 LED Supply Co 的收購。我們已經開始享受硬箱商品的跨市場銷售，將我們酒店業務的一部分納入項目投標由 LED 供電。事實上，我們已經確認了價值約 200 萬美元的鏡子。我們將繼續努力消除病原體，作為獨立式家具和酒店客房家具的一種選擇。這是一個很好的交叉銷售機會。

Our sales backlog for LED Supply is approximately 7 million. As we stated, we are forecasting total revenues for this calendar year of between 45 million and 50 million. And the results we accomplished in Q1 have further strengthened our view in this guidance. This further positions Applied UV as a fully integrated company, providing a broad pathogen elimination platform with leading technology that can be used by consumers, businesses, and governments.

我們的 LED 供應積壓訂單約為 700 萬個。正如我們所說，我們預計本日曆年的總收入將在 4500 萬至 5000 萬美元之間。我們在第一季度取得的成果進一步強化了我們對此指引的看法。這進一步使 Applied UV 成為一家完全一體化的公司，提供廣泛的病原體消除平台和領先的技術，可供消費者、企業和政府使用。

As we also stated for Q4 2022, the company plans to continue its return to national, international trade shows, representing and presenting our entire suite of product at leading industry conferences all around the world. These efforts combined with our planned 2023 marketing initiatives, will help pave the way for an increased pipeline of orders with new and existing client wins throughout the year.

正如我們在 2022 年第四季度所說的那樣，該公司計劃繼續重返國家、國際貿易展覽，在世界各地的領先行業會議上代表和展示我們的整套產品。這些努力與我們計劃的 2023 年營銷計劃相結合，將有助於為全年增加新客戶和現有客戶的訂單渠道鋪平道路。

To support those efforts, our Scientific Advisory Board, which includes Mark Beringer from the wine industry, Dr. Mason, who is an expert on PCO, and Dr. Bernard Camins from a leading infection prevention -- renowned expert from Mount Sinai Hospital, which each in their respective fields will be representing the company speaking at leading industry conferences and tradeshows regarding the efficacy and effectiveness of our pathogen elimination products in those proven verticals.

為了支持這些努力，我們的科學顧問委員會包括來自葡萄酒行業的 Mark Beringer、PCO 專家 Mason 博士和領先的感染預防專家——西奈山醫院的著名專家 Bernard Camins 博士。每個在各自領域的人都將代表公司在領先的行業會議和貿易展覽上就我們的病原體消除產品在這些經過驗證的垂直領域的功效和效果發表演講。

With our global distribution, which now includes 89 dealers and distributors in 52 countries, including Southeast Asia with manufacturing representatives -- or manufacturing reps in 19 US-based sales reps, along with numerous strategic partners is firmly in place. We have a leading competitive advantage over our public market peer group with relationships with Canon, Acuity Brands, Johnson Controls, USHIO, Siemens, and Grainger to name just a few.

我們的全球分銷網絡目前包括 52 個國家/地區的 89 個經銷商和分銷商，其中包括東南亞的製造代表，或 19 個美國銷售代表中的製造代表，以及眾多的戰略合作夥伴。與公開市場同行相比，我們擁有領先的競爭優勢，與佳能、Acuity Brands、江森自控、USHIO、西門子和 Grainger 等都有合作關係。

With both existing and new product offerings under development, we plan to leverage the potential cross market selling opportunities across all of our brands, offering our global end users a complete suite of research backed and clinically proven best-in-class products that utilizes photo catalytic oxidation, advanced UVC activated carbon, Far-UV, also known as 222 nanometer devices, indoor air quality monitoring software, and LED lighting for smart building products.

隨著現有產品和新產品的開發，我們計劃利用我們所有品牌潛在的跨市場銷售機會，為我們的全球最終用戶提供一整套經過研究支持和臨床驗證的一流產品，這些產品利用光催化技術氧化、先進的 UVC 活性炭、遠紫外線（也稱為 222 納米設備）、室內空氣質量監測軟件以及用於智能建築產品的 LED 照明。

Our transfer of manufacturing from offshore to Canon Virginia, a wholly owned subsidiary of Canon USA, is progressing on schedule with first production run complete. We believe this will yield a significant reduction in our fixed G&A expense into a variable G&A expense and believe this partnership will translate into production and logistics cost savings by removing manufacturing execution risk and allowing the company more effectively to scale and focus solely on marketing and sales. Canon Financial Services has recently completed the first of many anticipated leases with one of our customers.

我們將製造從海外轉移到佳能美國公司的全資子公司佳能弗吉尼亞工廠的工作正在按計劃進行，第一批生產已完成。我們相信，這將使我們的固定管理費用大幅減少為可變管理費用，並相信這種合作夥伴關係將通過消除製造執行風險並允許公司更有效地擴大規模並專注於營銷和銷售，從而轉化為生產和物流成本節約。佳能金融服務公司最近與我們的一位客戶完成了眾多預期租賃中的第一筆。

In terms of R&D, the PURO net proprietary software, which we've developed will finally allow us to cross the bridge and accelerate our transition to adding Internet of Things integration throughout our entire product portfolio with proven software that continuously will monitor indoor air quality throughout an entire facility, one of the reasons that we've got Johnson Controls interested in our proposed joint venture.

在研發方面，我們開發的 PURO net 專有軟件最終將使我們能夠跨越橋樑，加速我們向在整個產品組合中添加物聯網集成的過渡，並使用經過驗證的軟件持續監測室內空氣質量整個工廠，這是我們讓江森自控對我們擬議的合資企業感興趣的原因之一。

Additionally, we plan to invest and incorporate machine learning and AI capabilities into our indoor air monitoring software across our product line, which will allow us to competitively -- compete in one of the fastest growing air pathogen elimination markets, offering complete systems within systems with air monitoring software, a growing trend. We expect to heavily invest in AI in the next two quarters to drive our product to the front of the entire competitive field. Let me turn it now over to Mike Riccio, our CFO, for a further review of our financial results. Mike?

此外，我們計劃投資機器學習和人工智能功能，並將其納入我們整個產品線的室內空氣監測軟件中，這將使我們能夠在增長最快的空氣病原體消除市場之一中競爭，提供具有以下功能的完整系統：空氣監測軟件呈增長趨勢。我們預計未來兩個季度將大力投資人工智能，推動我們的產品走在整個競爭領域的前面。現在讓我將其轉交給我們的首席財務官 Mike Riccio，以進一步審查我們的財務業績。麥克風？

Thanks Max. Net sales of 10.7 million represented an increase of 7.3 million or 217.5% for the three months ended March 31, 2023, as compared to net sales of 3.4 million for the three months ended March 31, 2022. This increase was primarily attributable to the hospitality segment, which increased 4.7 million, largely as a result of the strategic acquisition on March 25, 2022, of the operations of VisionMark in Brooklyn, New York, which contributed 3.9 million of the increase and also due to the organic growth of our legacy MunnWorks business, which contributed 0.8 million of the increase.

謝謝馬克斯。截至2023年3月31日止三個月的淨銷售額為1,070萬美元，較截至2022年3月31日止三個月的淨銷售額340萬美元增加了730萬美元，即217.5%。這一增長主要歸因於酒店業部門增加了 470 萬美元，主要是由於 2022 年 3 月 25 日對紐約布魯克林 VisionMark 業務的戰略收購，貢獻了 390 萬美元的增長，同時也得益於我們傳統 MunnWorks 的有機增長業務，貢獻了80萬的增長。

The disinfection/healthy building technologies segment increased $2.6 million, primarily due to the acquisition of PURO Lighting and LED Supply Co. on January 26, 2023. Gross profit increased 0.8 million from 1.1 million or 34% versus sales for the three months ended March 31, 2022, to $1.9 million or 18% versus sales for the three months ended March 31, 2023. The decrease in percent from 34% to 18% was driven primarily by the higher sales mix of our hospitality segment as compared to the same period last year.

消毒/健康建築技術部門增加了 260 萬美元，主要是由於 2023 年 1 月 26 日收購了 PURO Lighting and LED Supply Co.。毛利潤從 110 萬美元增加了 80 萬美元，較截至 3 月 31 日止三個月的銷售額增加了 34% ，2022 年，至 190 萬美元，較截至 2023 年 3 月 31 日止三個月的銷售額下降 18%。百分比從 34% 下降至 18%，主要是由於我們的酒店業務部門的銷售組合與去年同期相比有所提高年。

For Q1 2023, hospitality accounted for 57% of total sales for the quarter as compared to 42% in the prior year quarter. The last of the lower margin projects that we acquired that were in process from the VisionMark asset acquisition had been substantially completed. Additionally, Q1 was impacted by one-time lower margins in our disinfection/healthy building technologies segment as we sold approximately half of our consumer Airocide inventory at special discounted pricing.

2023 年第一季度，酒店業佔該季度總銷售額的 57%，而去年同期為 42%。我們從 VisionMark 資產收購中收購的最後一個利潤率較低的項目已基本完成。此外，第一季度還受到消毒/健康建築技術領域利潤率一度下降的影響，因為我們以特別折扣價出售了大約一半的消費者 Airocide 庫存。

Our SG&A expenses for the three months ended March 31, 2023, increased to 5.3 million as compared to 3.1 million for the three months ended March 31, 2022. This increase of 2.2 million was driven primarily by the expansion of the disinfection/healthy building technologies segment with the acquisitions of PURO Lighting and LED Supply Co. These acquisitions accounted for 1.4 million of the increase.

截至2023年3月31日止三個月的SG&A費用增加至530萬美元，而截至2022年3月31日止三個月為310萬美元。這一增加220萬美元主要是由於消毒/健康建築技術的擴展通過收購 PURO Lighting 和 LED Supply Co.，這些收購貢獻了 140 萬美元的增長。

In corporate, legal expenses increased 0.6 million, primarily as a result of a one-time arbitration case. The company recorded an operating loss of 3.5 million for the three months ended March 31, 2023, compared to an operating loss of 3.1 million for the three months ended March 31, 2022. The increase of 0.4 million in the operating loss was primarily due to the decrease in the gross margin -- in the gross profit percentage year over year, as explained earlier, and the impairment charge of 1.1 million that was incurred last year.

在公司方面，法律費用增加了 60 萬，主要是由於一次性仲裁案件。截至2023年3月31日止三個月，該公司錄得營業虧損350萬元，而截至2022年3月31日止三個月營業虧損為310萬元。營業虧損增加40萬元主要是由於如前所述，毛利率同比下降，以及去年產生的 110 萬美元的減值費用。

On a percentage basis, the operating loss improved to 33% in the first quarter of 2023 as compared to 94% for the first quarter of 2022. The company incurred interest expense of 0.4 million due to the borrowings of Streeterville Capital and Pinnacle Capital, primarily to help fund the acquisitions of PURO Lighting and LED Supply Co. and to also fund additional working capital requirements.

按百分比計算，2023 年第一季度的運營虧損從 2022 年第一季度的 94% 改善至 33%。該公司因向 Streeterville Capital 和 Pinnacle Capital 借款而產生了 40 萬美元的利息支出，主要是幫助為收購 PURO Lighting 和 LED Supply Co. 提供資金，並為額外的營運資金需求提供資金。

The company incurred a non-cash loss on the change in fair market value of contingent consideration of 0.6 million because of the make-whole provision within the PURO and LED Supply Co. merger agreement, the change related to the decrease in our stock price from the date of acquisition of January 26 as compared to March 31, 2023. The company recorded a net loss of 4.5 million for the three months ended March 31, 2023, compared to a net loss of 1.6 million for the three months ended the prior year quarter.

由於 PURO 和 LED Supply Co. 合併協議中的全額準備金，公司因或有對價公允市場價值變動 60 萬美元而產生非現金損失，該變動與我們的股價從收購日期為1月26日，與2023年3月31日相比。該公司截至2023年3月31日止三個月的淨虧損為450萬歐元，而截至上一年的三個月淨虧損為160萬歐元四分之一。

The increase of 2.9 million in the net loss was mainly due to the 1.4 million increase in SG&A costs incurred as a result of the acquisition of PURO Lighting and LED Supply Co. in support of the expansion of the disinfection/healthy building technologies segment and also the 0.6 million increase in corporate legal expenses as a result of the one-time arbitration case and the non-cash loss on the change in fair market value of the contingent -- consideration of 0.6 million.

淨虧損增加290萬歐元，主要是由於收購PURO Lighting and LED Supply Co.以支持消毒/健康建築技術部門的擴張而導致SG&A成本增加140萬歐元，以及由於一次性仲裁案件導致公司法律費用增加 60 萬美元，以及因意外事件公平市場價值變動造成的非現金損失 -- -- 對價 60 萬美元。

Regarding liquidity, on July 1, 2022, the company filed a 50 million mixed use shelf registration form S-3 and entered into an at-the-market sales agreement or ATM with Maxim Group for a total of $9 million as a readily available source of funding if needed.

關於流動性，2022年7月1日，該公司提交了5000萬美元的混合用途貨架登記表S-3，並與Maxim集團簽訂了總計900萬美元的市場銷售協議或ATM作為現成來源如果需要的話，提供資金。

During the year ended December 31, 2022, the company sold just under 805,000 ATM shares through the sales agent with gross proceeds of approximately $964,000. As of March 31, 2023, an additional 1.764 million shares have been sold for gross proceeds of approximately $2.3 million. And this leaves a balance of approximately 5.7 million on the ATM facility. This shelf registration will expire on July 12, 2025.

截至 2022 年 12 月 31 日的年度，該公司通過銷售代理出售了近 805,000 股 ATM 股票，總收益約為 964,000 美元。截至 2023 年 3 月 31 日，已額外出售 176.4 萬股，總收益約為 230 萬美元。這樣，ATM 設施上就剩下大約 570 萬美元的餘額。該貨架註冊將於 2025 年 7 月 12 日到期。

The company has also filed a registration statement with the SEC with its plans to commence a public offering of its securities for an amount that satisfies the company's current working capital needs. The company believes our sources of liquidity and capital will be sufficient to finance our continued operations and growth strategy. I will now turn the call back over to Max for closing remarks. Max?

該公司還向美國證券交易委員會提交了一份註冊聲明，計劃開始公開發行其證券，發行金額可以滿足公司當前的營運資金需求。該公司相信我們的流動性和資本來源將足以為我們的持續運營和增長戰略提供資金。現在我將把電話轉回給馬克斯進行結束語。最大限度？

Well, I think we've covered everything. I think maybe we should just go since there's a limited amount of time to any question and answers. Let me just also say we remain extremely optimistic about the long-term and mid-term outlook for both pathogen elimination, healthy building segment, and our hospitality segment. We now have a portfolio of highly effective product that directly addresses all commercial demands, which we believe will continue to be strong levers in the period ahead. Thanks, everyone, for joining the call. We'll open the call now for questions.

嗯，我想我們已經涵蓋了所有內容。我想也許我們應該離開，因為任何問題和答案的時間都是有限的。我還要說的是，我們對消除病原體、健康建築領域和酒店領域的長期和中期前景仍然非常樂觀。我們現在擁有直接滿足所有商業需求的高效產品組合，我們相信這將在未來一段時間內繼續成為強大的槓桿。感謝大家加入通話。我們現在開始電話提問。

(Operator Instructions) Chip Moore, EF Hutton.

（操作員說明）Chip Moore，EF Hutton。

Yes, good morning. Thanks. Hey, Max and Mike and everybody. Thanks for taking the question. I wondered if you could expand on this food preservation opportunities. It sounds very interesting. Obviously, you've played there quite a while with your technology. maybe just how you're attacking that and with some of the newer solutions you talked about, I think a major product launch that you've got planned out of the Canon production. Just maybe fill us in on some more of the details and if you can leverage some of those (multiple speakers) --

是的，早上好。謝謝。嘿，麥克斯、邁克和大家。感謝您提出問題。我想知道您是否可以擴展這種食品保存機會。聽起來很有趣。顯然，你的技術已經在那裡玩了一段時間了。也許只是你如何解決這個問題，以及你談到的一些較新的解決方案，我認為你已經計劃在佳能生產中推出主要產品。也許可以向我們提供更多細節，如果您可以利用其中一些（多個發言者）--

Mike, let me take that question. This is Max Munn. We entered into an agreement with Canon. They have a 2 million square foot facility in Virginia where they'll be manufacturing our devices on a variable G&A expense basis. They have been instructed by their parent company in Tokyo to invest heavily in food security over the next decade.

邁克，讓我回答這個問題。這是馬克斯·穆恩。我們與佳能簽訂了協議。他們在弗吉尼亞州擁有 200 萬平方英尺的工廠，他們將在可變的管理費用基礎上製造我們的設備。他們受到東京母公司的指示，在未來十年內大力投資於糧食安全。

All of us feel Canon and AUVI feel that this is going to be a main driver for the growth of our company. It's a field and a problem that's worldwide that doesn't have easy solutions that's impacted by climate change, the lack of energy and electricity in much of the third world. We think that the technology that we have, which we developed for NASA, which is the only air disinfecting technology on the International Space Station, is ideal for addressing this problem.

我們所有人都認為佳能和 AUVI 認為這將成為我們公司增長的主要動力。這是一個世界範圍內的領域和問題，受到氣候變化、第三世界大部分地區能源和電力缺乏的影響，沒有簡單的解決方案。我們認為，我們為 NASA 開發的技術是國際空間站上唯一的空氣消毒技術，非常適合解決這個問題。

The main source of food degradation is excess of ethylene in the atmosphere. Food, especially high value food, such as fruit and berries, as they ripen, they generate ethylene and ethylene in a closed loop accelerates its own fruit and vegetable degradation. The trick is to remove ethylene effectively with the use of minimal amount of energy.

食品降解的主要來源是大氣中過量的乙烯。食品，尤其是高價值食品，如水果和漿果，在成熟時會產生乙烯，乙烯在閉環中加速其自身的水果和蔬菜降解。訣竅是使用最少量的能量有效去除乙烯。

We've developed a device, which we expect to file patents on very soon, which will go into long-haul refrigerated trucks and sea containers, which has gone through the first phase of testing, which will remove ethylene effectively. We've retained a PhD in this particular chemical field, who will be monitoring a test that Canon and AUVI will jointly undertake. We've contracted to put two sea containers in the parking lot of Canon's Newport News, Virginia facility.

我們已經開發了一種設備，預計很快就會申請專利，該設備將用於長途冷藏車和海運集裝箱，已經通過第一階段的測試，可以有效去除乙烯。我們聘請了這一特定化學領域的博士，他將監督佳能和 AUVI 將聯合進行的一項測試。我們已簽約在佳能弗吉尼亞州紐波特紐斯工廠的停車場放置兩個海運集裝箱。

One of the containers will have our device in it to remove ethylene. The other container would be a standard sea container without our device. Both of them will have timelapse cameras and both of them will have testing equipment, which will continually monitor, record, and transmit ethylene levels. We'll be able to see how a banana over-ripened or an avocado degrades or blueberries become useless in timelapse photography.

其中一個容器中裝有我們用於去除乙烯的裝置。另一個集裝箱是標準海運集裝箱，沒有我們的設備。他們都將配備延時攝影機和測試設備，持續監測、記錄和傳輸乙烯水平。我們將能夠看到香蕉過熟或鱷梨如何降解或藍莓如何在延時攝影中變得毫無用處。

We expect to introduce this device at the International Food Exhibition Conference on the West Coast in early October of this year. Canon is extremely excited about it. We are as well. The early indications are that the science not only is proven, but it's highly effective. So we expect to release an academic paper for the tradeshow. We expect we will have Canon exhibiting with us. We've expanded the presence at that tradeshow.

我們預計在今年10月初的西海岸國際食品展覽會上推出該設備。佳能對此感到非常興奮。我們也是。早期跡象表明，這項科學不僅得到證實，而且非常有效。因此，我們希望為展會發布一篇學術論文。我們預計佳能將與我們一起參展。我們擴大了該展會的影響力。

There's not much else to say except that the we'll have a dual PCO removal system, which will be highly effective. The science is proven. The device has been tested. Now we have to put it in the field and confirm what all of us expect. Chip, I hope I answered your question.

沒什麼可說的，除了我們將有一個雙 PCO 去除系統，這將是非常有效的。科學已被證明。該設備已經過測試。現在我們必須將其投入現場並確認我們所有人的期望。奇普，我希望我回答了你的問題。

Yeah. No, Max, that's great color. And it sounds very compelling. I guess, I think you answered it there around the sales cycle if you introduce it later this year and it sounds like the right way to think about that as incremental to growth for next year. I just want to make sure I'm thinking about --

是的。不，麥克斯，那顏色真棒。這聽起來非常引人注目。我想，如果你在今年晚些時候推出它，我認為你在銷售週期周圍回答了這個問題，這聽起來像是將其視為明年增長增量的正確方法。我只是想確定我正在考慮——

We already have our PCO standard device in several large facilities, like Dole, Del Monte, and Whole Foods refrigeration units. Refrigeration only slows down the degradation, it doesn't remove the ethylene. We remove the ethylene. With or without the refrigeration, our system is highly effective and has proven in large facilities. Now we want to prove it in the transit mode where most of the degradation occurs.

我們已經在多個大型設施中配備了 PCO 標准設備，例如 Dole、Del Monte 和 Whole Foods 製冷裝置。冷藏只會減慢降解速度，而不會去除乙烯。我們除去乙烯。無論有或沒有製冷，我們的系統都非常有效，並已在大型設施中得到證明。現在我們想在大部分退化發生的運輸模式下證明這一點。

Yeah, that was sort of my original -- one of my original questions was around that. You've proven your value proposition, right with those type of customers in the large facilities, is it similar -- does that accelerate the sales cycle you think on the distribution side where they've seen that proven value?

是的，這就是我的原創——我最初的問題之一就是圍繞這個。您已經向大型設施中的此類客戶證明了您的價值主張，是否相似 - 您認為這是否會加速分銷方面的銷售週期，他們已經看到了這種經過驗證的價值？

Absolutely. We expect to take orders the fourth quarter of this year.

絕對地。我們預計今年第四季度將接受訂單。

Perfect. And then my other question would be around cross-selling. Just more broadly, you talked about it, I think on the call laid out some of the success you guys had, how to think about some of those initiatives going forward and particularly, Max on the hospitality side, it still seems very strong, but just given, some of the macro stuff, any concerns there on the hospitality side?

完美的。我的另一個問題是關於交叉銷售。更廣泛地說，您談到了這一點，我認為在電話會議中列出了你們所取得的一些成功，如何考慮未來的一些舉措，特別是，馬克斯在酒店方面，它似乎仍然非常強大，但是剛剛給出的一些宏觀問題，酒店方面有什麼擔憂嗎？

No. In fact, the stress between China and Southeast Asia and the US is only going to increase and exacerbates the supply chain issues. We have one of the few large domestic facilities to supply the resort industry, hotels and other resort and leisure facilities with case goods and mirrors. In fact, the problem we have right now is getting sufficient qualified labor to work in our 100,000 square foot facility.

不會。事實上，中國與東南亞和美國之間的壓力只會增加並加劇供應鏈問題。我們擁有國內為數不多的大型設施之一，為度假村業、酒店和其他度假村和休閒設施提供箱包商品和鏡子。事實上，我們現在面臨的問題是如何獲得足夠的合格勞動力在我們 100,000 平方英尺的工廠中工作。

And so far as cross-selling is concerned, the PURO team of sales executives have signed up, I believe somewhere between 12 and 15 agencies across the country to sell the MunnWorks electrified mirrors to both general contractors and electrical contractors for installation in multifamily rentals and condos, verticals that MunnWorks is currently not in in the slightest. In fact, there's about $2 million of orders that we've been informed. We'll be getting the first $0.5 million order.

就交叉銷售而言，PURO 的銷售主管團隊已經簽約，我相信全國有 12 到 15 個機構已簽約，向總承包商和電氣承包商出售 MunnWorks 電動鏡子，用於安裝在多戶出租屋和住宅區。公寓，MunnWorks 目前根本不涉足的垂直行業。事實上，我們獲悉的訂單價值約為 200 萬美元。我們將獲得第一筆 50 萬美元的訂單。

We've finished sampling. We're actually going to have a draft of the purchase order. It will be for backlit electrified mirrors that go in above the vanities in these residential buildings. In addition to the backlit, our Brooklyn facility also manufactures vanities with and without stone tops for bathrooms. Every bathroom, whether it's a rental or a condo has to have a vanity and most likely a backlit mirror.

我們已經完成了採樣。我們實際上將會有採購訂單的草稿。它將用於安裝在這些住宅樓梳妝台上方的背光電動鏡子。除了背光之外，我們的布魯克林工廠還生產帶石檯面和不帶石檯面的浴室盥洗台。每間浴室，無論是出租的還是公寓的，都必須有梳妝台，很可能還有背光鏡子。

Additionally, these agencies, some of which have as many as 60 employees, will be selling to, not only the contractors, but directly to the ownership group. For example, we just received and are starting to ship a $400,000 order for backlit medicine cabinets going into a high end rental facility owned and being developed by the related companies, which is the largest real estate developer in the country right now, and this is in South Florida.

此外，這些機構（其中一些機構擁有多達 60 名員工）不僅會向承包商出售產品，還會直接向業主集團出售產品。例如，我們剛剛收到並開始運送一份價值 400,000 美元的背光藥櫃訂單，該訂單將用於相關公司擁有和開發的高端租賃設施，該公司是目前該國最大的房地產開發商，這是在南佛羅里達州。

So we've got unique product manufactured in the United States for use in the two verticals that we are currently not in, which we expect will yield enormous opportunities for the second half of this year and for all of, at least into 2024 that we foresee. We expect not only the political situation to play in our favor, but there's a shortage of capacity in this country and there's a huge need for multifamily development in this country because of roughly 2.5 million units shortfall.

因此，我們擁有在美國製造的獨特產品，可用於我們目前尚未涉足的兩個垂直領域，我們預計這將在今年下半年以及至少到 2024 年的整個時期產生巨大的機會。預見。我們預計不僅政治局勢對我們有利，而且這個國家的產能短缺，而且由於大約 250 萬套的短缺，這個國家對多戶住宅的開發有著巨大的需求。

But for buyers and renters, which the industry will have a hard time catching up on, and if the developers want to meet that demand and deal with that shortfall, they're going to need to buy domestically. The lead times for buying in China, right now is 16 weeks to 18 weeks to put it on the water. We're delivering in eight to 10 weeks. Chip, I hope I've answered that.

但對於買家和租戶來說，該行業將很難趕上，如果開發商想要滿足這一需求並解決短缺問題，他們將需要在國內購買。目前在中國購買的交貨時間是 16 周到 18 週，然後才能投入使用。我們將在 8 到 10 週內交付。奇普，我希望我已經回答了這個問題。

Yes. No, that's great color, Max. I appreciate it. Maybe Mike, just one for you on margins and the cadence there. Obviously, you worked off, it sounds like, the last of those lower-margin projects for VisionMark. I think you figured out a little bit of inventory. Just help me think about the margin ramp. It sounds like a sequential improvement in Q2, but kind of more substantial in back half with Canon and some of those initiatives. But anyway (multiple speakers) --

是的。不，那顏色真棒，麥克斯。我很感激。也許邁克，只是為你提供一篇關於邊緣和節奏的文章。顯然，您已經完成了 VisionMark 的最後一個低利潤項目。我想你已經弄清楚了一些庫存。請幫我考慮一下利潤率斜坡。聽起來像是第二季度的連續改善，但佳能和其中一些舉措在後半段的改善更為顯著。但無論如何（多個發言者）——

Exactly what will happen is this was -- I'll call this our lower margin quarter just because of what you said about the VisionMark projects, and that's behind us. And we had an opportunity to move two large chunks of our consumer product to two different customers. These are like spot buys and it was -- we just took advantage of it. And that's -- so those are out of the norm, let's say, and so we'll get back on to the higher margins going forward. As a matter of fact, we're just revising our forecast now for our Board meeting tomorrow. So I'm liking what I see and so, yeah, that will improve.

確切地說，將會發生的情況是——我將其稱為利潤率較低的季度，只是因為您所說的有關 VisionMark 項目的內容，而這已經是我們的過去了。我們有機會將兩大塊消費產品轉移給兩個不同的客戶。這些就像現貨購買，我們只是利用了它。可以說，這些都是不正常的，因此我們將恢復更高的利潤率。事實上，我們現在只是在修改對明天董事會會議的預測。所以我喜歡我所看到的，所以，是的，這會有所改善。

Mike, let me give Chip some more flavor on that two sales, one was to South Korea and the other I forgot where it was. Those two sales were --

邁克，讓我給奇普介紹一下這兩次銷售的更多信息，一次是銷往韓國，另一次我忘了它在哪裡。這兩次銷售是——

Dubai.

迪拜。

Dubai. Thank you. Those two sales were for consumer product that we're deemphasizing in terms of future sales, there's too much competition on the low end of the consumer market for a product that is not as effective as ours and consequently cheaper. None of which uses PCO, our consumer product did. We determined that the investment required for us to make the consumer market large and viable for us didn't give us the ROI that food preservation and hospitality would give us.

迪拜。謝謝。這兩次銷售是針對我們在未來銷售方面不重視的消費品，低端消費市場上的產品競爭過於激烈，而這些產品的效果不如我們的產品，因此價格也更便宜。其中沒有一個使用 PCO，但我們的消費產品使用了 PCO。我們確定，擴大消費市場並使其可行所需的投資並沒有給我們帶來食品保存和招待所帶來的投資回報。

We are moving away from that vertical because not only is it lower margin, very competitive, but the market itself isn't informed as to why they would pay more for an Airocide product versus a low-end PURO filtration product versus a PCO product. So we had an opportunity to recover some costs that prior management early in 2022 invested in and caused us some margin degradation. But we are substantially behind that now.

我們正在放棄這個垂直領域，因為它不僅利潤率較低，競爭非常激烈，而且市場本身並不知道為什麼他們願意為 Airocide 產品、低端 PURO 過濾產品和 PCO 產品支付更多費用。因此，我們有機會收回之前管理層在 2022 年初投資的一些成本，這些成本導致我們的利潤率下降。但我們現在已經遠遠落後了。

Perfect. Yeah, hopefully, the market recognizes that. And then -- and just last one, just around working capital, I guess. Inventories were up just with some of the acquisitions. And obviously, the Canon outsourcing arrangement, just how you're feeling there around working capital and inventory management.

完美的。是的，希望市場能夠認識到這一點。然後——我想就是最後一個，就營運資金而言。庫存僅隨著部分收購而增加。顯然，佳能外包安排，就是您對營運資金和庫存管理的感受。

You want to take that, Mike?

你想接受這個嗎，邁克？

Yeah, sure. So yeah, so you're right. You're seeing the impact of some of the acquisitions. And then -- but we're going to get into a better business cycle now moving that inventory and collecting on the [ARR], et cetera. So I'm feeling better about working capital going forward. And as a matter of fact, while you were speaking with Max, I it did cross my outlook here that Pinnacle Bank has increased our working capital line and with favorable terms.

好，當然。所以是的，所以你是對的。您正在看到一些收購的影響。然後 - 但我們將進入一個更好的商業周期，現在移動庫存並收集 [ARR]，等等。所以我對未來的營運資金感覺更好了。事實上，當您與馬克斯交談時，我確實看到平博銀行增加了我們的營運資金額度並提供了優惠的條件。

And it allows us the flexibility because there are some longer lead site, lead time business cycles, as we discussed earlier, especially in the hospitality segment. And so this expanded facility with Pinnacle will allow us flexibility to match that going forward. So I'm feeling more comfortable about working capital from the liquidity aspect as well. So I just wanted to get you up to date.

正如我們之前討論的，它為我們提供了靈活性，因為有一些較長的交貨地點、交貨時間商業周期，特別是在酒店領域。因此，與 Pinnacle 合作擴建的設施將使我們能夠靈活地適應未來的發展。因此，從流動性方面來看，我對營運資金也感到更加放心。所以我只是想讓你了解最新情況。

Yeah. No, that's awesome, real-time.

是的。不，這太棒了，實時的。

Yeah (multiple speakers) --

是的（多個發言者）——

I'll hop in if there's others, but appreciate all the color. Thanks, guys.

如果還有其他人，我會跳進去，但欣賞所有的顏色。多謝你們。

(Operator Instructions) There appears to be no further questions in queue at this time. I would now like to turn the floor back over to Max Munn for any closing remarks.

（操作員說明） 目前隊列中似乎沒有其他問題。現在我想請馬克斯·穆恩 (Max Munn) 發表結束語。

Well, we are -- as I said, we are extremely optimistic about the recent acquisitions and the cross-selling opportunities and margin growth. I'm here if any of you have any questions you can contact Mike or myself. We are always available.

嗯，正如我所說，我們對最近的收購、交叉銷售機會和利潤增長非常樂觀。我在這裡，如果你們有任何問題，可以聯繫邁克或我本人。我們隨時為您服務。

Thank you. This does conclude today's conference call. You may disconnect your phone lines at this time and have a wonderful day. Thank you for your participation.

謝謝。今天的電話會議到此結束。此時您可以斷開電話線並度過美好的一天。感謝您的參與。

Thank you.

謝謝。