SenesTech, Inc. (NASDAQ: SNES, "SenesTech" or the "Company"), the leader in fertility control to manage animal pest populations and the only manufacturer of commercial and consumer available EPA-registered Rat Birth Control® products today announced financial results for the third quarter of 2024.
Recent Highlights
- Revenues of $1.4 million in the first nine months of 2024, an increase of 51% compared to the same period of 2023.
- Gross margin percentages improved to 65% during Q3 2024 compared to 49% in Q3 2023 driven by improvements in manufacturing operations and scale. Gross profit dollars increased 79% during Q3 2024 compared to Q3 2023.
- Operating expenses decreased 12% in Q3 2024 compared to Q3 2023 as the Company maintains tight control of expenses.
- Quarterly adjusted EBITDA loss is the smallest in the Company's history, cutting the cash burn by 21% compared to the year ago quarter, as the Company focuses on its near-term goal of breaking even.
Updates on Key Growth Initiatives
- Launch of EvolveTM Rat: The Evolve Rat product, formulated especially for the proactive control of rodent fertility and launched at the beginning of 2024, has quickly become the Company's biggest-selling product line, contributing approximately 52% of Q3 2024 revenue. Q3 2024 sales of Evolve Rat increased 11% compared to Q2 2024.
- Launch of EvolveTM Mouse: The Evolve Mouse product, a fertility solution to proactively control mouse infestations, utilizing the same revolutionary breakthrough technology as the rat solution, was launched in May 2024 and quickly contributed 17% of Q3 2024 revenue.
- Expansion with key online retailers: The Company successfully launched Evolve Rat and Evolve Mouse on Amazon and diypestcontrol.com during the first half of 2024. Amazon represented 43% of overall e-commerce sales in the third quarter. Last week, the Company began selling product on Walmart.com and received approval from TractorSupply.com with product expected to be available for purchase in the coming weeks. Overall, sales on e-commerce related platforms, including SenesTech.com continue to trend upwards, with sales increasing approximately 20% in Q3 2024 compared to Q3 2023 representing approximately 35% of YTD 2024 sales.
- Brick and mortar retail chain adoption: The Company has increased its adoption of Evolve within its first key national home improvement retailer. The Company is also working with five manufacturer's representative agencies, with more than 50 outside representatives, targeting retail, coop and big box chains to inventory Evolve in their stores. The Company expects decisions from multiple retailers for store placement before the end of the year.
- Municipal programs: New York City Council has approved a bill to implement a rat contraception pilot program. From the bill, the term "rat contraceptive" means an agent for the reduction of reproductive capacity in rats that is approved for such use by the United States Environment Protection Agency and is available for sale. SenesTech is currently the only manufacturer of products that meet these requirements. Responding to requests from the city, the Company has prepared and presented an initial supply proposal and is in the process of negotiations with the city.
- International opportunities: Evolve has been registered in Hong Kong, and the Company is expecting pallet or container orders during the fourth quarter as marketing and sales in Hong Kong accelerates. In addition, the Company's distributor in The Netherlands has submitted a multi-pallet order, the largest order in the history of the company, for immediate fulfillment. We are also in the final stages of selecting exclusive distributors in India, Pakistan, Chile, Brazil and Taiwan. Finally, the Company's distributor in Australia/New Zealand is in the final stages of registration for the regulatory approval of Evolve.
- Expanded distribution agreements: We have added Site One Supply, a pest management distributor with over 322 locations, and Clearview, a leading agricultural distributor that services the egg and poultry production market. With both, we are on-boarding our products onto their system and beginning training.
- Enhanced packaging options: The Company launched new product packaging for Evolve including convenient 1.5 pound, 3 pound, and 6 pound pouches which use 87% less plastic than traditional pails and provide for enhanced gross margins.
- Studies: The Company currently has field efficacy trials under way, including an east coast agricultural firm involved in sugar cane operations and a leading pest management professional deploying Evolve in a housing area on a west coast university campus. In addition, a western university is completing a laboratory efficacy trial for Evolve Mouse. Finally, a leading pest control firm is conducting a California Department of Pesticide Regulation funded study on sustainable alternatives to rodenticide use.
Management Discussion
"We remain keenly focused on the rapid, multi-channel expansion of the Evolve product line which culminated in yet another quarter of record revenues," commented Joel Fruendt, President and CEO of SenesTech. " From an operational perspective, we are focused on enhanced efficiencies in all aspects of our processes, which resulted in a new all-time quarterly record for gross margins of 65%, and 12% year-over-year reduction in operating expenses."
"As we finish 2024, we have a number of initiatives set to be significant contributors to top line growth, including the recent approval to sell Evolve on third party e-commerce platforms; multiple large international orders set to ship before the end of the year; adoption by key brick-and-mortar retailers; potential deployment in New York City and other key municipalities; and broader adoption of our new Evolve Rat and Mouse solutions through existing channels."
"As the only manufacturer of products registered or designated by the U.S. EPA for the restriction of rodent reproduction, we have a tremendous opportunity ahead of us to 'Change the Game' of how the rodent control industry addresses rodent infestations. With Evolve, and its improved form factor, economical price point, proven efficacy, and lengthy shelf life, we have addressed all the key product attribute requirements communicated to us by the industry. We look forward to continued rapid adoption of our innovative solutions," Fruendt concluded.
