TOMI Environmental Solutions, Inc. Q1 FY2026 earnings call

Q1 2026 marked healthy start with 5% Y/Y revenue growth and 67% Q/Q growth. Applicator sales up 139% Y/Y. BIT Solution sales growing 21% annually. 15% reduction in operating expenses. Positive operating cash flow of $296,000. Integrated project pipeline strengthening with backlog growth to $2.2 million. Received 440,000 annual purchase orders for recurring decontamination services. Private East Coast research university purchased and installed SteraMist hybrid system. Sold custom engineered system in U.K. to international pharmaceutical manufacturer. Established Total Clean Air as preferred European partner. Food safety sector gaining traction with case study showing 95% reduction in sanitization testing costs. Regulatory advancements including U.K., Dutch, German, Belgian, Danish, Hungarian approvals. Executed nonbinding letter of intent to merge with Carbonium Core, Inc. aiming to diversify business.

Revenue for Q1 2026 was $1.6 million, a 5% increase from Q1 2025 and 67% sequential increase over Q4 2025. Product revenue increased $300,000 or 31% due to higher equipment and CES-related sales. Service revenue decreased by $234,000 or 41% due to timing of decontamination project completions. Gross profit was $832,000 or approximately 50% of revenue compared to $952,000 or approximately 6% of revenue in Q1 2025. Total operating expenses were $1.48 million, a reduction of 15% compared to Q1 2025. Net cash provided by operating activities was $296,000 for Q1 2026, an improvement of $572,000 from Q1 2025. Backlog at year-end 2025 was $1.6 million, grew by $0.5 million to $2.2 million by Q1 2026. Applicator sales in Q1 2026 surpassed total 2025 applicator sales with 139% year-over-year growth. BIT Solution sales have consistently grown by 21% annually since 2024 and remained above 2025 levels in Q1 2026.

Anticipate growth through 2026 and beyond. Aim to finalize definitive agreement with Carbonium Core by May 30, 2026. Projected sales pipeline between $22 million and $33 million with $9 million active. Conservatively anticipate $2 million in consumables and other smaller revenue streams. Expect to be profitable within the year.

Forward-looking statements subject to risk factors that could cause actual results to differ. Hantavirus situation with potential lack of immediate follow-up. Merger with Carbonium Core subject to definitive agreement, due diligence, and customary closing conditions including stockholder approval. Uncertainties regarding timing and success of regulatory approvals and market penetration for certain products and markets.

Q: On gross margin side, how will it bounce back and need for discounts?

A: No need for continued discounts, margins will bounce back.

Q: Pipeline robust, will revenues grow sequentially and any lumpiness?

A: Most definitely, see growth through 2026 and beyond.

Q: Traction from Hantavirus developments?

A: Not at the moment, but prepared to help.

Q: Diligence on Carbonium merger and expertise?

A: Forming committee for due diligence, aware of technology.

Q: After merger, shares outstanding if convertible preferred converted?

A: Probably around $32 million.

Q: Carbonium's projected 2028 revenues?

A: As heard, $1.4 billion to $1.5 billion.

Q: Obstacles to Carbonium merger closing?

A: None major expected.

Q: Profitability timing for TOMI?

A: Within this year.

Q: Going after honeybee market?

A: Reached out to association, marketing department working on study.

Q: Robotaxi market and SteraMist use?

A: Initially mold backpack using humanoid robotics.

Q: Penetrating markets like airlines and cruise ships?

A: Need to be bigger company, grant writers for grants.

Q: Changes to applicators or new uses?

A: No changes to applicators, multiple versions offered with integration projects and stand-alone systems.