ProPhase Labs, Inc. (PRPH) on Q1 2022 Results - Earnings Call Transcript
Operator: Good day and welcome to the ProPhase Labs First Quarter 2022. Financial Results and Corporate Update Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal our conference specialists by pressing star then zero. After today's presentation, there will be an opportunity to ask questions. . Please note this event is being recorded. I would now like to turn the conference over to Ted Karkus, Chairman and CEO of ProPhase Labs. Please go ahead, sir.
Ted Karkus: Thanks so much, Matt. And thank you all for joining me this morning. Obviously, we had a great quarter, and I'll get into that in a moment, but of course I have to do the standard forward looking statements, which obviously is important. So here goes. Before we begin today's call, I want to advise everyone that today's conference call will contain forward-looking statements, including statements relating to our plans, expectations, future performance and future events, including statements regarding projected financial results for the second quarter of 2022, our expectations regarding the COVID-19 pandemic, future waves of the pandemic and continued demand for diagnostic testing, purse of funding; our plans to grow our diagnostic business, and expand our lab services, and our plans to grow our genomics businesses, build a WGS library and attract academic institutions, and our plans to develop a broad spectrum anti-viral OTC dietary supplement, and build a pharmaceutical division, and our expectations regarding the sufficiency of our cash or working capital. These statements are subject to risks and uncertainties that could cause our actual results to differ materially from those suggested by the forward-looking statements. Additional information concerning factors that could cause our results to differ materially from these forward-looking statements are contained in the earnings release that we issued earlier today, as well as in our public filings with the SEC. The company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise except to the extent required by applicable law. Finally, the conference call is being webcast. Webcast link is available in the investor relations section of ProPhaseLabs.com. Thank you for bearing with me while I read all that. I take the forward-looking statement actually quite seriously. I do like to talk a lot about our future plans and of course they're never guarantees, but I will tell you that everything I state today, I believe 100% as of today question in my mind, as the things that I talked about. And so look let's get into it. I have to start by saying we have built an amazing team when you start into new business. So, we started in the CLIA lab business in late 2020. It was new business for me, it was new business for our company. We built out very, very quickly. You hire people you've developed the good management teams continue to evolve. The people that I thought were strong understand I didn't know the business a year-and-a-half ago. I thought I was hiring fantastic people for the business. They were -- I appreciate all they did in the beginning to get us off the ground. But as the company evolve, we hired people. I was able to learn the business and also understand exactly what we needed to develop the business, and exactly the type of people we needed. And quite frankly, we substantially upgraded our management team throughout 2021. We have excused the expression, we have a kick ass management team. And I do these virtual non-deal roadshows. I want to give a lot of thanks to Renmark financial, who sets up the virtual non-deal roadshows, I do one or two of these a month. I started every one of those calls. I think if you're going to invest in micro-cap or startup or development stage companies, there's nothing more important than analyzing your management team. I can tell you from 40 years of investing, I always invest in companies where I'm excited about the product or the service. The management team most of the time doesn't execute. And I've said this quarter-after-quarter, you want to invest if you're investing in development stage companies, you have to put a lot of faith in the management teams. And the problem is 95% of the time the management teams don't execute, and that's why you lose money, and so when you look at this bear market that started. And I've been telling everybody, hope for a year that we've been in the bear market. Now, all the side and the median last few months is picking up on it because the larger cap, the Dow average, the Nasdaq, indexes, these are all dropped dramatically over the last three to six months. But we've actually been at a bear market for Microcap stocks for almost a year-and-a-half. Breakingly reminds me of 1998, and I'm daring myself now but that's a period of time you want to look at. We're talking 24 years ago. And what happened was the micro-caps dropped and then the major averages followed. And then we went into this boom for a while with the micro-caps and with the high-tech stocks into 2,000. And it was pretty crazy tome. The reason I point that actually is we're going through the exact same thing. Now 24 years ago, the micro-caps have already been in a bear market for almost a year-and-a-half. This is the time to be looking at them. Well, you want to be looking at are the micro-caps that have a management team that has demonstrated to execute. So it's interesting, you go back over time. And yes, we raised capital in January of 2021 as did a ton of other companies is an enormous time for investment banks to be. The raising capital for companies, look at most of those startup companies, they are burning through most of that cash, they've lost most of that cash, and they're going to have to raise more and we're in a bear market, they can't raise more. And that's why there's stocks continue to plummet because they're going to have to do dilutive rounds of financing or go out of business. Meanwhile, if you look at our capital, we've now paid, we just announced today another $0.30 dividend after we just announced a couple of months ago. So at $0.60 and dividends just in the last couple of months, we also paid a $0.30 dividend last year, in the middle of last year. So we paid $0.90 in dividends and yet our working capital is up dramatically from the capital that we raised in January 2021. That's a company and a management team that executes. And again, going back on a little bit of , I'm so excited about the management team that we have in place now. We have a killer team. People that are incredibly willed. I don't want to go through their names, I don't want to leave anybody out, but just suffice it to say in every department, we are incredibly strong. And what we built out in the lab business, we very quickly became one of the strongest CLIA labs for COVID testing in the entire state of New York, and in fact in the entire country. We are the darlings of our customers. We not knock on wood. I don't believe we've ever lost a customer. And it's because our turnaround times are better, our IT is more efficient, our customer service is fantastic. And so now what we have done in the COVID testing business, we want to expand. So I want to talk about the numbers a little bit. But I did want to just say and acknowledge how great our entire management team is. And we literally have been building it in every department and in that regard, we came out with a press release the other day, so we just hired Bill White to be our new CFO. I want to thank Monica Brady for doing an absolute fantastic job. When our former COO / CFO left the company, she took over as the CFO and provided really a smooth transition, and has done a fantastic job helping build our company from a $10 million to a $100 million company. Now, the goal is to build our company from a $100 million company to a a billion-dollar company. And the same that we're building in every other department, we're also building out our finance department so that we're prepared as we grow. And so that's why we hired the white. Monica was extremely helpful and helping me and our company and our Board of Directors and searching for a CFO that she will now work with. She is an incredible team player, incredibly loyal, and honestly, nobody has worked harder than Monica, she works 24/7 to get the job done. And now it's simply time to build the department further. Same thing in all the other departments, we have such strong departments. Our IT -- and you got to understand, we built out this lab in this past year, and we did it with state-of-the-art equipment, and the same thing with our IT, we've built out really custom-made high-end IT platforms that are so easy to use for our customers. So we really are a state-of-the-art lab. It's very difficult for other labs, quite frankly, to compete with us. And so even in this time where COVID may have slowed a little bit, our businesses, as you can see, is still booming. And there's a reason for that because we're not losing customers. We're a more diversified lab in terms of our customer base, I can get into this in the Q&A. There's so much to cover. And I'm really going to leave it up to people to as questions in terms of what directions I go in. The numbers speak for themselves. I also want to give a quick sat out to a couple of our investment bankers. Of course, think equity has done a phenomenal job first and last year and half, H.C. Wainwright picked up coverage and working very closely with them as well. Those two fantastic investment banks are
