TOMI Environmental Solutions, Inc. (NASDAQ: TOMZ) Q2 2025 Earnings Call | 08/15/2025

Summary of TOMI Environmental Solutions, Inc. Q2 2025 Financial Results Conference Call (August 15, 2025)

Overview: TOMI Environmental Solutions, Inc. held its Q2 2025 earnings call, hosted by John Nesbitt of IMS Investor Relations, with participation from CEO Dr. Halden Shane, COO E.J. Shane, and CFO David Vanston. The call reviewed financial performance, operational achievements, and strategic updates for Q2 2025.

Financial Highlights (David Vanston):

• Revenue: Q2 2025 revenue was $1.031 million, a 66% decrease from $3 million in Q2 2024, primarily due to deferred capital expenditure projects amid economic uncertainties and tariffs affecting customer supply chains.
• Service Revenue Growth: Service-based revenue for Q2 was $378,000, up 33% year-over-year, and $955,000 for the first six months, up 46%. This growth was driven by increased demand from life sciences and food safety clients.
• Gross Margin: Improved to 66% in Q2 2025 due to a favorable product mix, particularly higher-margin solution sales.
• Operating Loss: Reported at $1.1 million, compared to a $120,000 operating income in Q2 2024.
• Net Loss: $1.28 million ($0.06 per share) versus a net income of $30,000 ($0.00 per share) in Q2 2024.
• Financial Position: As of June 30, 2025, cash and equivalents were $569,000, working capital was $2.8 million, and shareholders’ equity was $2.7 million.

Operational Highlights (Dr. Halden Shane):

• Revenue and Backlog: As of August 7, 2025, combined recognized revenue, deferred revenue, and sales order backlog totaled $4.6 million, with $2 million in new custom and integrated contracts under negotiation, expected to close by year-end.
• Pipeline: Open opportunities for Custom Engineered Systems (CES), SteraMist Integrated Systems (SIS), and hybrid solutions totaled $15 million, with $7 million as high-priority.
• Service Growth: IHP service revenue grew 33% in Q2 and 46% year-to-date, driven by long-term and new platinum clients, including top-tier industry leaders.
• Solution Sales: Increased 40% year-to-date, with high margins reinforcing the company’s “razor blade” model.
• Key Projects: Successfully validated a NASA project, now operational, and secured a $180,000 SIS contract with a university for September delivery. Expanded partnerships with food industry clients and a material handling equipment supplier.
• Recognition: SteraMist was named the 2025 Disinfection and Decontamination Product Company of the Year.

Strategic Updates (E.J. Shane):

• OEM Partnership: Strengthened collaboration with PBSC, enhancing SIS offerings. A new university contract in Miami (not with PBSC) reflects growing academic partnerships.
• Pipeline Growth: Active bids for CES, SIS, and hybrid solutions range from $105,000 to $1.8 million, totaling $7 million. Service quotes rose 35% year-over-year.
• Regulatory Progress: Awaiting EU/UK approvals and pursuing FDA Food Contact Notification (FCN) for food safety applications, particularly for avocados and leafy greens. Also working on 510K approval for medical device decontamination chambers.
• New Opportunities: Secured a four-week decontamination service contract with the U.S. Army Medical Research Institute, exploring scalable solutions for BSL3/BSL4 facilities. Discussions with a multinational food processor for a 25-unit SteraMist order and with an avocado wholesaler.
• Distribution: Expanded distributor networks (e.g., ARIES, Avantor Sciences) and international partners in Germany, Netherlands, and Italy, driving new client acquisitions.

Outlook (Dr. Halden Shane):

• TOMI remains optimistic about H2 2025, focusing on infrastructure enhancements, strategic partnerships, and regulatory approvals to drive growth.
• The company is energized to exceed budget targets, leveraging its strong sales backlog, high-margin solution sales, and growing client base among top global companies.
• Management emphasized expanding technical expertise, sales strategies, and global distribution to capitalize on opportunities in life sciences, food safety, and emerging industries like pharma manufacturing and microchip production.

Q&A Highlights:

• Solution Sales Margins: Dr. Shane highlighted that solution sales, up 40% year-to-date, significantly boosted gross margins to 66% due to their high profitability.
• Pharma Manufacturing: The trend of reshoring pharma to the U.S. presents significant opportunities, with TOMI’s quick, non-caustic decontamination solutions well-positioned for new facilities.
• Deferred Projects: Some deferred CAPEX projects are resuming, with customer deposits indicating activity for Q1 2026 and deliveries in Q3/Q4 2025.
• FDA Approvals: E.J. Shane noted ongoing FDA 510K and FCN efforts, which could expand SteraMist’s use in food safety (e.g., addressing mold, salmonella) and medical applications.
• New Applications: Exploring SteraMist for extending flower shelf life, with ongoing tests and regulatory considerations.