TOMI Environmental Solutions, Inc. Announces Cost Reduction Efforts to Sustain Long Term Growth and Achieve Profitability

Rhea-AI Summary

TOMI Environmental Solutions, a global leader in disinfection technology, has announced cost reduction efforts aimed at achieving long-term profitability. The company plans to reduce executive compensation by 30% and cut external consulting fees, targeting a 30% reduction in operational cash use, approximately $500,000, by the end of 2024. Despite these cuts, TOMI will invest in expanding its sales team and global distribution network.

Key business updates include the successful installation of multiple Custom Engineered Systems (CES) expected to generate around $600,000 starting in 2025. TOMI is also in the final stages of securing a $450,000 CES contract with a prominent U.S. cell and gene therapy facility. The company is optimistic about securing new contracts, anticipating an increase in iHP Corporate Services revenue and ongoing negotiations with four major decontamination manufacturers.

Additionally, TOMI has signed a distribution deal with India's STS Technocrat and made its first sale under a Vizient contract, promoting its SteraMist technology.

Positive

• 30% reduction in executive compensation.
• 30% reduction in operational cash use by end of 2024, saving approximately $500,000.
• Expansion of the sales team and global distribution network.
• Successful installation of multiple CES systems, expected to generate $600,000 starting in 2025.
• Near completion of a $450,000 CES contract with a U.S. cell and gene therapy facility.
• Anticipated increase in iHP Corporate Services revenue due to competitive shifts.
• Securement of approximately $1 million per annum in repeatable revenue from the decontamination service industry.
• Signed distribution deal with STS Technocrat in India.
• First sale under Vizient contract to a university for an Environment System.

Negative

• Reduction in executive compensation may signal financial strain.
• Dependence on future contract completions and revenue, posing potential risk if deals fall through.
• Reduction in external consulting fees could impact the quality of strategic advice.
• Expected savings and revenue generation are projections and not guaranteed.

Insights

Financial Analyst

The cost-reduction measures announced by TOMI Environmental Solutions, Inc. have significant implications. By cutting executive compensation by 30 and reducing external consulting fees, the company aims to save approximately $500,000 by the end of 2024. This strategic move highlights a commitment to enhancing operational efficiency and aligning executive interests with shareholder value. The reduction in cash outflows can help improve the company’s liquidity position and reduce financial strain, which is important for a business that appears to be navigating a competitive landscape. These efforts may also signal to investors that the company is taking proactive steps to achieve profitability, which could potentially boost investor confidence in the short term. However, the company's strategy includes maintaining investments in sales personnel and global distribution, indicating a balanced approach to cost management while continuing to drive growth. It's essential to closely monitor the effectiveness of these measures in achieving the stated savings and their impact on the company's overall financial health.

Rating: 1

Market Research Analyst

TOMI's initiative to expand its sales personnel and global distribution network is critical for increasing market penetration and product reach. The investment in sales personnel suggests that the company is aiming to boost its revenue streams by capturing additional market share. The global expansion strategy, including the onboarding of STS Technocrat in India, positions TOMI to tap into new and potentially lucrative markets. This could lead to improved sales performance and enhanced brand recognition globally. Additionally, the anticipated contracts and progress in the Custom Engineered Systems (CES) installation indicate a growing acceptance of TOMI's technology in high-value sectors such as cell and gene therapy facilities. This diversification of revenue streams and geographic expansion can mitigate risks and create stable, long-term growth prospects. Investors should consider the potential for increased revenue and market presence when evaluating TOMI's future outlook.

Rating: 1

Tech Expert

TOMI's ongoing innovation in disinfection technology, particularly through its Binary Ionization Technology (BIT) platform and the SteraMist brand, showcases the company's commitment to maintaining technological leadership. The technology’s reliance on ionized Hydrogen Peroxide (iHP) provides a potent germ-killing solution that is both effective and non-caustic, distinguishing it from competitors using Vaporized Hydrogen Peroxide (VHP). The move to replace inferior VHP technologies with SteraMist Integrated System products indicates a confidence in the superior efficacy of their technology. This technological edge can be a significant competitive advantage, particularly in the life sciences market, where precision and reliability are critical. Investors should watch for how these technological advancements translate into market share gains and revenue growth, as successful realization can drive long-term value.

Rating: 1

Company restructures executive compensation and reduces external consulting fees

Expects to reduce cash used in operations by 30% (Approximately $500,000) by end of 2024

Company to continue to invest in sales personnel and global distribution network to expand product reach

FREDERICK, Md., June 06, 2024 (GLOBE NEWSWIRE) -- TOMI Environmental Solutions, Inc.^® (“TOMI”) (NASDAQ: TOMZ), a global company specializing in disinfection and decontamination utilizing its premier Binary Ionization Technology (BIT) platform through its SteraMist brand of products, today announced comprehensive cost reduction initiatives to align the Company’s cost structure with targeted profitability objectives.

The Company’s operational cash savings initiatives include:

• Executive Compensation Modifications: Executives will reduce their compensation by 30% of their current cash compensation for the remainder of 2024, thereby reducing the Company’s cash requirements for salaries and ensuring alignment of interests with shareholders.
• Optimization of Consultant Arrangement: Termination of select external consulting agreements, with remaining consultants agreeing to reduce their consultant fees. This initiative, along with reductions in other costs, fosters a leaner and more efficient operational model.

These cost-reduction measures underscore TOMI's commitment to enhancing financial performance while maintaining investments in critical areas such as product development and sales team expansion. The Company anticipates that these initiatives will result in a 30% or approximately $500,000 reduction in cash used in operations by the end of 2024.

This proactive action reinforces TOMI's dedication to delivering long-term value to shareholders and achieving profitability, while sustaining innovation and growth momentum in its core business segments.

Below is an update on some current business developments:

TOMI is making significant progress expanding the installation of Custom Engineered Systems (CES) worldwide. The Company has successfully installed double digit CES systems, with expectations for these installs to generate approximately $600,000 from BIT Solution starting in 2025.

The Company believes it is nearing the close of another CES contract with a prominent cell and gene therapy facility in the United States. The customer is a current user of TOMI mobile equipment, and is currently in phase two of a bid scheduled for a next month close. This contract includes a SteraMist CES, which has already been allocated in the budget for approximately $450,000. The project is currently scheduled for completion by the end of 2024.

TOMI is making substantial progress in the rapidly evolving decontamination service industry and anticipates an increase in iHP Corporate Services revenue. Recent shifts in the competitive landscape have resulted in an increase in quotations and opportunities. This summer, the Company anticipates securing a significant contract, complementing TOMI’s approximately $1 million per annum in repeatable revenue from this sector.   

Additionally, the Company has signed and onboarded STS Technocrat, a distributor based in India with 35 years of collective experience in technical consumable sales. Their clientele includes notable names within TOMI’s targeted industries. In May, TOMI made its first sale under its Vizient contract to a university for an Environment System and the Company is in discussions with four key enclosure decontamination manufacturers to promote the use of iHP and the SteraMist Integrated System (SIS) product lines, replacing the inferior VHP technologies on the market.  

TOMI is executing against its strategy of enhancing its product line, including a fully automated decontamination solution targeting the broader Life Sciences market, and expanding its base of distributors and partners to efficiently promote its technology and deliver new opportunities across all markets.

TOMI™ Environmental Solutions, Inc.: Innovating for a safer world®

TOMI™ Environmental Solutions, Inc. (NASDAQ: TOMZ) is a global decontamination and infection prevention company, providing environmental solutions for indoor surface disinfection through the manufacturing, sales and licensing of its premier Binary Ionization Technology® (BIT™) platform. Invented under a defense grant in association with the Defense Advanced Research Projects Agency (DARPA) of the U.S. Department of Defense, BIT™ solution utilizes a low percentage Hydrogen Peroxide as its only active ingredient to produce a fog of ionized Hydrogen Peroxide (iHP™). Represented by the SteraMist® brand of products, iHP™ produces a germ-killing aerosol that works like a visual non-caustic gas.

TOMI products are designed to service a broad spectrum of commercial structures, including, but not limited to, hospitals and medical facilities, cruise ships, office buildings, hotel and motel rooms, schools, restaurants, meat and produce processing facilities, military barracks, police and fire departments, and athletic facilities. TOMI products and services have also been used in single-family homes and multi-unit residences.

TOMI develops training programs and application protocols for its clients and is a member in good standing with The American Biological Safety Association, The American Association of Tissue Banks, Association for Professionals in Infection Control and Epidemiology, Society for Healthcare Epidemiology of America, America Seed Trade Association, and The Restoration Industry Association.

For additional information, please visit https://www.steramist.com/ or contact us at info@tomimist.com.

Forward-Looking Statements

This press release contain forward-looking statements that are based on current expectations, estimates, forecasts and projections of future performance based on management’s judgment, beliefs, current trends, and anticipated product performance. These forward-looking statements include, without limitation, statements relating to cost reduction measures and compensation changes; anticipated launch of new products; expected growth in sales pipeline and market demand; revenue opportunities of CES products and brand recognition of our products. Forward-looking statements involve risks and uncertainties that may cause actual results to differ materially from those contained in the forward-looking statements. These factors include, but are not limited to, our ability to acquire new customers and expands sales; our ability to maintain and manage growth and generate sales, our reliance on a single or a few products for a majority of revenues; the general business and economic conditions; and other risks as described in our SEC filings, including our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 filed by us with the SEC and other periodic reports we filed with the SEC. The information provided in this document is based upon the facts and circumstances known at this time. Other unknown or unpredictable factors or underlying assumptions subsequently proving to be incorrect could cause actual results to differ materially from those in the forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance, or achievements. You should not place undue reliance on these forward-looking statements. All information provided in this press release is as of today’s date, unless otherwise stated, and we undertake no duty to update such information, except as required under applicable law.

INVESTOR RELATIONS CONTACT:
John Nesbett/Roz Christian
IMS Investor Relations
tomi@imsinvestorrelations.com

FAQ

What cost reduction measures has TOMI Environmental Solutions announced?

TOMI has announced a 30% reduction in executive compensation and cuts to external consulting fees, aiming to reduce operational cash use by approximately $500,000 by the end of 2024.

How much operational cash use does TOMI aim to reduce by the end of 2024?

TOMI aims to reduce operational cash use by approximately $500,000 by the end of 2024.

What are TOMI's plans for its sales and distribution network?

TOMI plans to invest in expanding its sales team and global distribution network despite cost reduction efforts.

What is the expected revenue from TOMI's Custom Engineered Systems installations?

TOMI expects the installations to generate around $600,000 starting in 2025.

What significant contract is TOMI nearing completion of?

TOMI is nearing the completion of a $450,000 Custom Engineered System contract with a U.S. cell and gene therapy facility.

What is TOMI's anticipated annual revenue from the decontamination service industry?

TOMI anticipates approximately $1 million per annum in repeatable revenue from the decontamination service industry.

Who is TOMI's new distributor in India?

TOMI has signed a distribution deal with STS Technocrat, based in India.

What recent sale has TOMI made under its Vizient contract?

TOMI made its first sale under its Vizient contract to a university for an Environment System.