CEA Industries Inc (BNC) 2022 Q4 法說會逐字稿

Good afternoon, ladies and gentlemen, and welcome to the CEA Industries Q4 and full-year 2022 earnings conference call. Joining us today are the company's Chairman and CEO, Tony McDonald; as well as company's CFO, Ian Patel. (Operator Instructions)

女士們先生們，下午好，歡迎來到 CEA Industries 第四季度和 2022 年全年收益電話會議。今天加入我們的有公司董事長兼首席執行官 Tony McDonald；以及公司的首席財務官 Ian Patel。 （操作員說明）

Before we begin, please be advised that this call may contain statements of a forward-looking nature relating to future events. These forward-looking statements are subject to the inherent uncertainties in predicting future results and conditions. These statements reflect CEA Industries' current belief, and a number of important factors could cause actual results to differ materially from those expressed in this call, including the risk factors set forth in the company's Form 10-K, which was filed with the SEC. Please refer to their SEC filings for a more detailed discussion of the risks and uncertainties associated with their business.

在我們開始之前，請注意本次電話會議可能包含與未來事件相關的前瞻性陳述。這些前瞻性陳述受預測未來結果和條件的固有不確定性的影響。這些聲明反映了 CEA Industries 目前的信念，許多重要因素可能導致實際結果與本次電話會議中表達的結果存在重大差異，包括公司向美國證券交易委員會提交的 10-K 表格中規定的風險因素。請參閱他們提交給美國證券交易委員會的文件，以更詳細地討論與其業務相關的風險和不確定性。

Please note that the company filed its 10-K and issued a press release announcing fourth-quarter full-year results earlier today. These documents can be found on the Investor Relations section of the company's website at ceaindustries.com. If you'd like to be added to the company's e-mail distribution list, please send an e-mail to info@ceaindustries.com.

請注意，該公司今天早些時候提交了 10-K 報告並發布了一份新聞稿，宣布第四季度全年業績。這些文件可以在公司網站 ceaindustries.com 的投資者關係部分找到。如果您想加入公司的電子郵件分發列表，請發送電子郵件至 info@ceaindustries.com。

It is now my pleasure to turn the floor over to Tony McDonald, Chairman and CEO of CEA Industries. Sir, the floor is yours.

現在我很高興將發言權交給 CEA Industries 董事長兼首席執行官 Tony McDonald。先生，地板是你的。

Thank you, and good afternoon, everyone. As we have seen across many industries, volatility in the macro environment has persisted, affecting both operators and consumers over the past year. The market environment for cannabis specifically has also continued to face headwinds as operators contend with pricing pressure and inflationary impacts on consumer wallets. As a result, capital expenditures in the sector have slowed significantly, resulting in delayed, reduced, or eliminated cultivation facility construction projects, which has negatively impacted our project bookings and revenue.

謝謝，大家下午好。正如我們在許多行業所看到的那樣，宏觀環境的波動持續存在，在過去的一年裡對運營商和消費者都產生了影響。特別是大麻的市場環境也繼續面臨不利因素，因為運營商要應對價格壓力和通脹對消費者錢包的影響。因此，該行業的資本支出大幅放緩，導致種植設施建設項目延遲、減少或取消，這對我們的項目預訂和收入產生了負面影響。

To navigate this environment, we have continued to focus on diversifying our customer base outside of cannabis, while proactively implementing cost-saving initiatives to mitigate future supply chain and inflationary pressure on our business. These initiatives included a reduction enforced along with various operating expense savings.

為了駕馭這種環境，我們繼續專注於使我們的客戶群在大麻之外多樣化，同時積極實施成本節約舉措，以減輕未來供應鍊和我們業務的通脹壓力。這些舉措包括強制執行的減少以及各種運營費用的節省。

No stone was left unturned as we evaluated every line item of our business to identify opportunities for savings in response to the challenging environment. We did not take these actions lightly as they were a result of thorough review and diligent planning for the long-term viability of our business. Early signs have begun to show a positive trend as we -- as evidenced by our double-digit sequential reduction in operating expenses in Q4. We expect to continue realizing OpEx savings and further improve both our working capital and liquidity positions throughout 2023 without compromising the high standard of service our customers expect.

我們不遺餘力地評估了我們業務的每一個項目，以確定應對充滿挑戰的環境的節約機會。我們並沒有輕率地採取這些行動，因為它們是對我們業務的長期生存能力進行徹底審查和勤勉規劃的結果。早期跡像已經開始顯示出積極的趨勢——我們在第四季度的運營費用連續減少了兩位數就證明了這一點。我們希望在 2023 年繼續實現運營支出節省，並進一步改善我們的營運資金和流動性狀況，同時不影響客戶期望的高標準服務。

A great example of our higher standard was reflected by a new contract win that we announced in November, in which we signed our third consecutive contract with a Northeast cultivation facility. Earlier in the year, we performed a mechanical engineering services for this 36,000 square foot cultivation and processing space, followed by a benching equipment and installation contract.

我們在 11 月宣布的一項新合同中標反映了我們更高標準的一個很好的例子，我們在該合同中連續第三次與東北種植設施簽訂合同。今年早些時候，我們為這個 36,000 平方英尺的種植和加工空間提供了機械工程服務，隨後簽訂了台架設備和安裝合同。

Due to our exceptional work in the prior engagement, we have now been contracted to provide HVACD equipment for their flower, veg, mother, clone, and dry cure rooms, as well as cannabis processing rooms. These are the types of wins that reflect our quality of service, as well as the potential growth opportunity within our existing customer base.

由於我們在之前的合作中表現出色，我們現在已經簽約為他們的花卉、蔬菜、母親、克隆和乾醃室以及大麻加工室提供 HVACD 設備。這些勝利類型反映了我們的服務質量，以及我們現有客戶群中的潛在增長機會。

Quickly reviewing a few other key developments in Q4. Earlier in 2022, we announced a formal partnership with Merida Capital, a cannabis-focused private equity firm, in which Merida agreed to use us as its sole provider of certain products and services for its indoor cultivation facilities. Since signing the agreement, we have signed two engineering contracts and one equipment contract with one of Merida's Connecticut-based clients to provide engineering and a suite of HVAC systems. Late in the year, the size of the facility nearly doubled, expanding the opportunity for equipment sales.

快速回顧一下第四季度的其他一些關鍵發展。 2022 年初，我們宣布與專注於大麻的私募股權公司 Merida Capital 建立正式合作夥伴關係，Merida 同意將我們作為其室內種植設施某些產品和服務的唯一供應商。自簽署協議以來，我們已與 Merida 位於康涅狄格州的一位客戶簽署了兩份工程合同和一份設備合同，以提供工程和一套 HVAC 系統。年底，該設施的規模幾乎翻了一番，擴大了設備銷售的機會。

As highlighted in our last conference call, in November, we entered into a non-equity strategic alliance with Hydrobuilder Holdings, a leading omni-channel platform with 22 retail locations and 10 warehouses, serving the indoor and outdoor CEA and hydroponics industry. Since entering the agreement, Hydrobuilder has introduced us to several opportunities for our services. In addition, we have been able to integrate their products and services into our offerings, allowing us to start to offer a more complete design package for our customers.

正如我們在 11 月的上一次電話會議中強調的那樣，我們與 Hydrobuilder Holdings 建立了非股權戰略聯盟，Hydrobuilder Holdings 是一個領先的全渠道平台，擁有 22 個零售點和 10 個倉庫，服務於室內和室外 CEA 和水培行業。自簽訂協議以來，Hydrobuilder 已向我們介紹了多項服務機會。此外，我們已經能夠將他們的產品和服務整合到我們的產品中，使我們能夠開始為我們的客戶提供更完整的設計包。

Looking at our suite of products and services. In Q4, we announced a partnership with Evoqua Water Technologies to offer new innovative water treatment solutions. These include sampling, system design, equipment supply, and system integration, along with providing the ability to treat and purify the water stream, so it can be reintroduced as a pure water source. Not only does this offer a financial benefit to the company, but an environmentally sustainable solution for water conservation, which is top of mind for many organizations that monitor their impact on the environment.

查看我們的產品和服務套件。在第四季度，我們宣布與 Evoqua Water Technologies 建立合作夥伴關係，以提供新的創新水處理解決方案。其中包括採樣、系統設計、設備供應和系統集成，以及提供處理和淨化水流的能力，因此它可以作為純淨水源重新引入。這不僅為公司帶來了經濟利益，而且是一種環境可持續的節水解決方案，這是許多監測其對環境影響的組織的首要考慮。

Consistent with our strategic plan, we continue to pursue and win non-cannabis CEA opportunities. In Q4, we signed two engineering contracts for such facilities, both growing leafy greens and herbs. That success has continued into this year as we signed two more contracts for engineering and equipment for non-cannabis facilities.

根據我們的戰略計劃，我們繼續尋求並贏得非大麻 CEA 機會。在第四季度，我們為此類設施簽署了兩份工程合同，均種植綠葉蔬菜和香草。這一成功一直持續到今年，因為我們又簽署了兩份非大麻設施的工程和設備合同。

I will now hand it over to Ian Patel, our Chief Financial Officer, to discuss financial highlights for the quarter before wrapping up with closing remarks. Ian?

現在，我將把它交給我們的首席財務官 Ian Patel，討論本季度的財務亮點，然後再以結束語結束。伊恩？

Thanks, Tony, and good afternoon, everyone. Jumping right into our results, Q4 revenue was $1.5 million compared to $3.1 million in the year-ago period. The decrease was primarily attributed to supply chain and project delays, as well as a reduction in size and number of signed contracts during 2022.

謝謝，托尼，大家下午好。直接進入我們的結果，第四季度的收入為 150 萬美元，而去年同期為 310 萬美元。減少的主要原因是供應鍊和項目延誤，以及 2022 年簽訂的合同規模和數量減少。

Our net bookings in the fourth quarter were $206,000 compared to $4 million in the same period in 2021. Backlog at quarter end was $5.6 million compared to $10.8 million in the year-ago quarter. The decrease in net bookings and backlog was primarily driven by fewer capital projects and expenditures by cannabis growers.

我們在第四季度的淨預訂量為 206,000 美元，而 2021 年同期為 400 萬美元。季度末的積壓訂單為 560 萬美元，而去年同期為 1080 萬美元。淨預訂和積壓的減少主要是由於大麻種植者的資本項目和支出減少。

Gross profit for the fourth quarter of 2022 was $200,000, or 10.3% of revenue, compared to $600,000, or 18.1% of revenue for the same period in 2021. The decrease in gross margin was primarily driven by lower revenue and higher variable costs, which includes the cost of equipment, external engineering, shipping and handling, and travel and warranty costs.

2022 年第四季度的毛利潤為 200,000 美元，佔收入的 10.3%，而 2021 年同期為 600,000 美元，佔收入的 18.1%。毛利率下降的主要原因是收入減少和可變成本增加，這包括設備成本、外部工程、運輸和裝卸以及差旅和保修成本。

Operating expenses in the fourth quarter decreased 6% to $1.4 million compared to $1.5 million in the year-ago quarter. It's worth noting that our OpEx is also down 13% from Q3 2022, reflecting the early benefit of our various cost-saving initiatives.

與去年同期的 150 萬美元相比，第四季度的運營費用下降 6% 至 140 萬美元。值得注意的是，我們的運營支出也比 2022 年第三季度下降了 13%，這反映了我們各種成本節約舉措的早期效益。

Net loss for the fourth quarter of 2022 was $1.3 million, or negative $0.18 per share, compared to a net loss of $400,000, or negative $0.25 per share in the year-ago quarter. The net loss per share improved year over year due to the higher issued and outstanding share count as of the fourth-quarter 2022.

2022 年第四季度的淨虧損為 130 萬美元，或每股負 0.18 美元，而去年同期為淨虧損 40 萬美元，或每股負 0.25 美元。由於截至 2022 年第四季度的已發行和流通股數量增加，每股淨虧損同比有所改善。

As of December 31, 2022, cash and cash equivalents were $18.6 million compared to $2.2 million as of December 31, 2021, while working capital increased by $15.1 million during this period. The increase was primarily driven by net proceeds from the sale of our common stock and warrants of approximately $22 million in February 2022. At December 31, 2022, we remain debt free.

截至 2022 年 12 月 31 日，現金和現金等價物為 1860 萬美元，而截至 2021 年 12 月 31 日為 220 萬美元，而營運資本在此期間增加了 1510 萬美元。增長的主要原因是 2022 年 2 月出售我們的普通股和認股權證的淨收益約為 2200 萬美元。截至 2022 年 12 月 31 日，我們仍然沒有債務。

This concludes my prepared remarks. I'll pass it back to you, Tony.

我準備好的發言到此結束。我會把它傳給你，托尼。

Thank you, Ian. Looking ahead, we will remain cautious with our spending and capital as we evaluate the lingering supply chain and inflationary environment. Our cost-saving initiatives have already begun to produce benefits. And between our efforts to further reduce expenses and diversify our customer base, we are confident in our ability to navigate this challenging period.

謝謝你，伊恩。展望未來，在評估揮之不去的供應鍊和通脹環境時，我們將對支出和資本保持謹慎。我們的成本節約舉措已經開始產生效益。在我們進一步減少開支和使客戶群多樣化的努力之間，我們對我們度過這個充滿挑戰的時期的能力充滿信心。

Our strong capital position provides us both optionality and durability as we look to execute on our organic and inorganic growth initiatives.

我們強大的資本狀況為我們提供了選擇性和持久性，因為我們希望執行我們的有機和無機增長計劃。

Operator, at this time, we will open the floor for questions.

接線員，這時候我們將開放提問環節。

(Operator Instructions)

（操作員說明）

And as we wait for people to enter the queue, I'll field some questions received via email and the webcast.

在我們等待人們進入隊列時，我將回答通過電子郵件和網絡廣播收到的一些問題。

First one, can you provide more color on how pricing pressure and headwinds affecting cannabis operators impacts our business?

第一個，你能提供更多關於影響大麻運營商的定價壓力和逆風如何影響我們業務的顏色嗎？

The first thought there is that CapEx projects are often one of the first to be delayed or cancelled when businesses face headwinds. As cannabis companies increasingly focused on their core operations and turning cash flow positive, many have dialed back their CapEx plans which of course impacts our ability to book and forecast revenue in the future. That said, we believe our decision to diversify our end markets with vertical ag providers will bring more revenue stability longer term.

第一個想法是，當企業面臨逆風時，資本支出項目通常是最先被推遲或取消的項目之一。隨著大麻公司越來越關注其核心業務並將現金流轉為正數，許多公司已經縮減了他們的資本支出計劃，這當然會影響我們未來預訂和預測收入的能力。也就是說，我們相信我們決定通過垂直農業供應商使我們的終端市場多樣化，這將帶來更長期的收入穩定性。

Another question. In February, you announced a set of cost-saving initiatives and a reduction enforced to help right size the business given the challenging macro environment. How should we think about your OpEx run rate going forward?

另一個問題。 2 月，您宣布了一系列成本節約舉措，並在充滿挑戰的宏觀環境下實施了削減措施，以幫助調整業務規模。我們應該如何考慮您未來的 OpEx 運行率？

I would respond that we're pleased with the double-digit sequential reduction in Q4 operating expenses, and these savings have been carried into 2023. We aren't providing guidance on our OpEx at this time, but know that we do expect lower OpEx from current levels as we move through 2023.

我會回應說，我們對第四季度運營支出連續兩位數減少感到滿意，這些節省已結轉至 2023 年。我們目前不提供有關運營支出的指導，但我們確實預計運營支出會降低從目前的水平到 2023 年。

Other question. What is your contingency plan if the macro environment deteriorates further? How will you balance growth and profitability?

其他問題。如果宏觀環境進一步惡化，你們有什麼應急計劃？您將如何平衡增長和盈利能力？

I would say that we are intently focused on maximizing profitability and minimizing our cash burn. As it stands today, we have ample runway to see through the current market environment with approximately $19 million of cash and equivalents on the balance sheet.

我會說我們專注於最大化盈利能力和最小化我們的現金消耗。就目前而言，我們有足夠的跑道來了解當前的市場環境，資產負債表上有大約 1900 萬美元的現金和等價物。

We intend to preserve cash so that we are well-positioned to succeed as the industry improves and believe a strong cash position will allow us to take advantage of opportunities, such as M&A, that may come up in 2023 as the cannabis industry consolidates.

我們打算保留現金，以便隨著行業的改善，我們有能力取得成功，並且相信強大的現金狀況將使我們能夠利用機會，例如隨著大麻行業整合而在 2023 年可能出現的併購。

That concludes the pre-submitted questions. Operator, are there any questions from the lines at this time?

預先提交的問題到此結束。接線員，此時線路有問題嗎？

There were no questions from the lines at this time.

此時線路上沒有任何問題。

Well, I thank you. This concludes today's conference call. We look forward to presenting our first-quarter results in the coming months.

好吧，我謝謝你。今天的電話會議到此結束。我們期待在未來幾個月公佈第一季度業績。

An audio replay of this call will be available on ceandustries.com/investors beginning on March 28 at 4:30 PM Eastern time, and will remain available until April 11, 2023. You may disconnect your lines at this time and have a wonderful day. Thank you for your participation.

此電話會議的音頻重播將於東部時間 3 月 28 日下午 4:30 開始在 ceandustries.com/investors 上提供，並將一直提供到 2023 年 4 月 11 日。此時您可以斷開線路並度過美好的一天.感謝您的參與。