CEA Industries Inc (BNC) 2023 Q2 法說會逐字稿

Good afternoon, ladies and gentlemen, and welcome to the CEA Industries Q2 2023 earnings conference call. Joining us today are the company's Chairman and CEO, Tony McDonald; as well as the company's CFO, Ian Patel. (Operator Instructions)

女士們、先生們，下午好，歡迎參加 CEA Industries 2023 年第二季度財報電話會議。今天加入我們的是公司董事長兼首席執行官托尼·麥克唐納 (Tony McDonald)；以及該公司的首席財務官伊恩·帕特爾(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 based on what we believe are reasonable assumptions, which ultimately could prove to be inaccurate and are subject to the inherent uncertainties in predicting future results and conditions.

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聲明。這些前瞻性陳述基於我們認為合理的假設，這些假設最終可能被證明是不准確的，並且受到預測未來結果和條件的固有不確定性的影響。

These statements reflect CEA Industries' current beliefs, 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 previously filed with the SEC. Please refer to their SEC filings for a more detailed discussion of the risks and uncertainties associated with their business. The forward-looking statements that the company has made are intended to be within the meaning of forward-looking statements in Section 27A of the Securities Act of 1933 as amended.

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，包括該公司之前向 CEA 提交的 10-K 表格中規定的風險因素。美國證券交易委員會。請參閱他們向 SEC 提交的文件，了解與其業務相關的風險和不確定性的更詳細討論。該公司做出的前瞻性陳述符合經修訂的 1933 年《證券法》第 27A 條中前瞻性陳述的含義。

Also, please note that the company filed its quarterly report on Form 10-Q and issued a press release announcing second-quarter results earlier today. These documents can be found on the Investor Relations section of the company's website at ceaindustries.com. If you would like to be added to the company's e-mail distribution list, please send an e-mail to info@ceaindustries.com.

另請注意，該公司已於今天早些時候提交了 10-Q 表格季度報告，並發布了宣布第二季度業績的新聞稿。這些文件可以在公司網站 ceaindustries.com 的投資者關係部分找到。如果您想添加到公司的電子郵件分發列表中，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.

現在我很高興請 CEA Industries 董事長兼首席執行官托尼·麥克唐納 (Tony McDonald) 發言。先生，地板是你的了。

Thank you, and good afternoon, everyone. The volatility in the broader cannabis environment has continued as operators contend with the prolonged effects of pricing and inflationary pressures. We have also witnessed a reduction in investment in and reorganization within the controlled environment agricultural sector. As a result, capital expenditures across both sectors remain reduced, resulting in delayed, reduced, or eliminated construction projects.

謝謝大家，大家下午好。隨著運營商應對定價和通脹壓力的長期影響，更廣泛的大麻環境持續波動。我們還目睹了受控環境農業領域投資的減少和重組。因此，這兩個部門的資本支出仍然減少，導致建設項目被推遲、減少或取消。

These conditions have had an adverse impact on our net bookings and revenue over the last year. As a result of the challenges this year, we pre-emptively implemented a series of cost-cutting initiatives that have reduced our operating expenses by more than 60% compared to the year-ago period. We have taken a disciplined approach to capital allocation with respect to product development, marketing, and personnel.

這些情況對我們去年的淨預訂量和收入產生了不利影響。面對今年的挑戰，我們搶先實施了一系列成本削減舉措，運營費用同比下降了60%以上。我們在產品開發、營銷和人員方面採取了嚴格的資本配置方法。

We plan to identify additional savings opportunities in the months ahead as we remain intently focused on maintaining this lean cost structure without compromising the high level of service our customers expect. Despite dialing back our marketing spend, we are well equipped to continue sourcing and evaluating new opportunities as well as servicing our current contracts as we further diversify our customer base across the cannabis and traditional agriculture sectors.

我們計劃在未來幾個月尋找額外的節省機會，因為我們將繼續專注於維持這種精益成本結構，同時又不影響客戶期望的高水平服務。儘管縮減了營銷支出，但隨著我們進一步使大麻和傳統農業領域的客戶群多元化，我們有能力繼續尋找和評估新機會，並為我們當前的合同提供服務。

As we announced alongside our Q2 results earlier today, we have initiated a review of strategic alternatives, including a sale, merger, or other potential strategic or financial transaction to protect and maximize shareholder value. Our Board of Directors has retained Roth Capital Partners as our financial adviser to assist in the review process. We are committed to executing on the best path forward for our shareholders, customers, and employees. We will not be commenting further on this until the Board has concluded that disclosure is appropriate or required.

正如我們今天早些時候宣布的第二季度業績一樣，我們已啟動對戰略替代方案的審查，包括出售、合併或其他潛在的戰略或財務交易，以保護和最大化股東價值。我們的董事會已聘請 Roth Capital Partners 作為我們的財務顧問，以協助審查過程。我們致力於為我們的股東、客戶和員工走上最佳的前進道路。在董事會得出結論認為披露是適當或需要之前，我們不會對此發表進一步評論。

Looking ahead, we will be mindful of the challenging environment as we seek additional cost savings and secure new contract wins in the cannabis and traditional agriculture verticals. We have taken the necessary measures to navigate these uncertain times. And we believe these initiatives, coupled with our strong balance sheet, will enable us to continue servicing our customers while we seek to maximize shareholder value.

展望未來，我們將注意到充滿挑戰的環境，因為我們尋求額外的成本節省並確保在大麻和傳統農業垂直領域贏得新合同。我們已採取必要措施來應對這些不確定的時期。我們相信，這些舉措加上我們強大的資產負債表，將使我們能夠繼續為客戶提供服務，同時尋求股東價值最大化。

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

現在，我將請我們的首席財務官 Ian Patel 討論本季度的財務亮點，然後再做總結髮言。伊恩？

Thanks, Tony, and good afternoon, everyone. Jumping right into our results, Q2 revenue was $1.1 million compared to $3 million in the year-ago period. The decrease was primarily attributed to lower revenue recognition from our backlog and an overall reduction in capital expenditures by cannabis and controlled agricultural operators.

謝謝托尼，大家下午好。直接看我們的業績，第二季度的收入為 110 萬美元，而去年同期的收入為 300 萬美元。減少的主要原因是我們積壓的收入確認減少以及大麻和受控農業經營者的資本支出總體減少。

Net bookings in the second quarter were approximately $200,000 compared to $1.5 million in the same period in 2022. Our quarter-end backlog was $1.1 million compared to $9.7 million in the year-ago quarter. The decrease in net bookings and backlog was again primarily driven by fewer capital projects and expenditures in the industry.

第二季度的淨預訂量約為 20 萬美元，而 2022 年同期為 150 萬美元。季末積壓訂單為 110 萬美元，而去年同期為 970 萬美元。淨預訂量和積壓訂單的減少再次主要是由於行業資本項目和支出減少所致。

Gross profit for the second quarter of 2023 was approximately $79,000 or 7.4% of revenue compared to $300,000 or 10.2% of revenue for the same period in 2022. The decrease in gross margin was primarily driven by an increase in fixed costs as a percentage of revenue, which includes the cost of services, engineering, manufacturing, and project management.

2023 年第二季度的毛利潤約為 79,000 美元，佔收入的 7.4%，而 2022 年同期為 300,000 美元，佔收入的 10.2%。毛利率下降主要是由於固定成本佔收入的百分比增加所致，其中包括服務、工程、製造和項目管理的成本。

Operating expenses in the second quarter decreased 62% to approximately $800,000 compared to $2.1 million in the year-ago quarter. The decrease was primarily driven by lower product development expenses, reduced personnel, and marketing costs, as well as a $632,000 goodwill impairment that occurred in the year-ago period. It's worth noting that our OpEx decreased 38% from Q1 of 2023, reflecting a continued benefit from the cost-saving initiatives implemented over the past few months.

第二季度運營費用下降 62%，至約 80 萬美元，而去年同期運營費用為 210 萬美元。下降的主要原因是產品開發費用減少、人員和營銷成本減少，以及去年同期發生的 632,000 美元商譽減值。值得注意的是，我們的運營支出較 2023 年第一季度下降了 38%，反映出過去幾個月實施的成本節約舉措持續帶來的好處。

Net loss for the second quarter of 2023 improved to approximately $700,000 or negative $0.09 per share compared to a net loss of $1.8 million or negative $0.23 per share in the year-ago quarter. As of June 30, 2023, cash and cash equivalents were $14.2 million compared to $18.6 million as of December 31, 2022, while working capital decreased by approximately $900,000 during this period. At June 30, 2023, we remain debt-free.

2023 年第二季度的淨虧損改善至約 70 萬美元，即每股負 0.09 美元，而去年同期淨虧損為 180 萬美元，即每股負 0.23 美元。截至 2023 年 6 月 30 日，現金和現金等價物為 1,420 萬美元，而截至 2022 年 12 月 31 日為 1,860 萬美元，而在此期間營運資金減少了約 90 萬美元。截至 2023 年 6 月 30 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。我會把它傳回給你，托尼。

Thank you. As we look to the back half of the year, we will continue to run lean operations while targeting new contract wins in both the cannabis and traditional agriculture verticals. Between our robust balance sheet, optimized cost structure, and prudent approach to capital allocation, we are well-positioned to navigate this challenging environment and deliver value to our customers and shareholders alike.

謝謝。展望今年下半年，我們將繼續精益運營，同時瞄準大麻和傳統農業垂直領域的新合同。憑藉我們穩健的資產負債表、優化的成本結構和審慎的資本配置方法，我們有能力應對這一充滿挑戰的環境，並為我們的客戶和股東創造價值。

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

接線員，現在我們開始提問。

(Operator Instructions)

（操作員說明）

As we wait to people to enter the queue, I will field some questions received by e-mail and the webcast. Question: are you planning to report updates on the strategic alternatives, and if so, how frequently? The answer is we will provide updates on the process as our Board deems appropriate.

當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。問題：您是否計劃報告戰略替代方案的最新情況？如果是，頻率如何？答案是，我們將在董事會認為適當的情況下提供流程的最新信息。

Question: on the M&A front, what characteristics are you looking for in a partner or acquirer? Answer: we are casting a wide net to ensure the greatest outcome for shareholders consistent with our Board's established guidance. This includes partners both inside and outside the cannabis and CEA Industries.

問：在併購方面，您希望合作夥伴或收購方具備哪些特徵？答：我們正在廣泛撒網，以確保股東獲得符合董事會既定指導的最大成果。這包括大麻和 CEA Industries 內部和外部的合作夥伴。

Question: has your ability to win new contracts been impacted by the reduction in your sales and marketing investment? Answer: as we mentioned in our prepared remarks, we've seen a slowdown in contract opportunities and as such have reduced our sales and marketing efforts accordingly. We will continue to evaluate new business opportunities. And we will, of course, continue servicing our customers for current and new projects.

問題：銷售和營銷投資的減少是否影響了您贏得新合同的能力？答：正如我們在準備好的發言中提到的，我們發現合同機會減少，因此相應減少了我們的銷售和營銷力度。我們將繼續評估新的商機。當然，我們將繼續為現有和新項目的客戶提供服務。

Question: given the challenges in the indoor agriculture and cannabis sectors, do you plan to pivot to any new -- any adjacent or new categories? Answer: as I mentioned earlier, the Board is casting a wide net for the strategic review process that includes targeting opportunities in cannabis and agriculture as well as other industries that can drive the greatest shareholder value.

問題：考慮到室內農業和大麻領域的挑戰，您是否計劃轉向任何新的——任何相鄰或新的類別？回答：正如我之前提到的，董事會正在為戰略審查流程廣泛撒網，其中包括瞄準大麻和農業以及其他可以推動股東價值最大化的行業的機會。

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，此時線路有什麼問題嗎？

There were no questions from the lines at this time.

此時線路上沒有任何問題。

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

好的，謝謝。今天的電話會議到此結束。我們期待在未來幾個月內公佈第三季度業績。

An audio replay of this call will be available on ceaindustries.com/investors (sic - ir.ceaindustries.com) beginning on August 14 at 5:15 PM Eastern Time and will remain available until August 28, 2023. You may disconnect your lines at this time and have a wonderful day. Thank you for your participation.

本次電話會議的音頻重播將於美國東部時間8 月14 日下午5:15 起在ceaindustries.com/investors (原文如此- ir.ceaindustries.com) 上提供，並將持續到2023 年8 月28 日。您可以斷開線路此時，祝您度過美好的一天。感謝您的參與。