By Grant Zeng, CFA
On December 14, PURE reported financial results for fiscal first quarter of 2017 ended October 31, 2016.
Total revenue for the fiscal first quarter ended October 31, 2016 increased 186% to $531,000 compared with prior first quarter revenues of $186,000.
Core food safety revenues for the first quarter increased 902% as compared with food safety revenues in the first quarter ended 2015, validating the accelerating momentum of PURE’s focused food safety strategy.
Gross margin declined to 50% during the first quarter of fiscal 2017 as compared with 71% during the same period in fiscal 2016. The decrease was primarily attributable to the sale of lower margin formulations and packaging configurations of products during the quarter ended October 31, 2016 as compared with the prior period.
R&D costs for fiscal first quarter 2017 were $0.25 million, compared to $0.24 million for the same period of last year.
SG&A costs for fiscal first quarter 2017 were $1.1 million, compared to $1.2 million for the fiscal first quarter of 2015.
Total operating costs and expenses, excluding cost of goods sold and share-based compensation, for the first quarter ended of 2016 and 2015, were $1.6 million and $1.3 million, respectively.
Net loss for the first quarter 2017 was $1.7 million ($0.03 per share), compared with $1.9 million ($0.04 per share) for fiscal first quarter in 2015.
During the fiscal first quarter, two national restaurant chains (including Chipotle Mexican Grill) adopted PURE® Hard Surface disinfectant as a food safety solution.
We are very pleased that for the first time quarterly sales of PURE Hard Surface disinfectant exceeded $500,000. With the adoption of Chipotle, we believe sales of PURE Hard Surface will accelerate in the coming quarters and beyond.
Balance Sheet Remains Strong
As of October 31, 2016, PURE had a cash balance of $4.1 million with no long term debt.
In May 2016, PURE raised $1.27 million from the exercise by all of the holders of the 2,820,670 warrants expiring May 23, 2016.
In October, 2015, PURE closed a $6 million private placement with strategic lead investor Franchise Brands LLC. This is Franchise Brands’ second investment in PURE.
In November 2015, PURE completed the second and final closing of a follow-on private placement financing with its existing investors, raising $2 million to support its operations.
These financings greatly boosted the company’s balance sheet. More importantly, the transactions further validate the company’s SDC technology.
With the PURE Control first order in calendar 1Q17, we believe the company could break even in the next 12 to 18 months.
Current cash combined with cash flow generated from operations will support the Company's operations and business plan through end of calendar 2017 according to our financial model.
For a free copy of the full research report, please email scrinvestors@zacks.com with PURE as the subject.
SUBSCRIBE TO ZACKS SMALL CAP RESEARCH to receive our articles and reports emailed directly to you each morning. Please visit our website for additional information on Zacks SCR and to view our disclaimer.
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PURE: Update On Fiscal First Quarter Financials
By Grant Zeng, CFA
On December 14, PURE reported financial results for fiscal first quarter of 2017 ended October 31, 2016.
Total revenue for the fiscal first quarter ended October 31, 2016 increased 186% to $531,000 compared with prior first quarter revenues of $186,000.
Core food safety revenues for the first quarter increased 902% as compared with food safety revenues in the first quarter ended 2015, validating the accelerating momentum of PURE’s focused food safety strategy.
Gross margin declined to 50% during the first quarter of fiscal 2017 as compared with 71% during the same period in fiscal 2016. The decrease was primarily attributable to the sale of lower margin formulations and packaging configurations of products during the quarter ended October 31, 2016 as compared with the prior period.
R&D costs for fiscal first quarter 2017 were $0.25 million, compared to $0.24 million for the same period of last year.
SG&A costs for fiscal first quarter 2017 were $1.1 million, compared to $1.2 million for the fiscal first quarter of 2015.
Total operating costs and expenses, excluding cost of goods sold and share-based compensation, for the first quarter ended of 2016 and 2015, were $1.6 million and $1.3 million, respectively.
Net loss for the first quarter 2017 was $1.7 million ($0.03 per share), compared with $1.9 million ($0.04 per share) for fiscal first quarter in 2015.
During the fiscal first quarter, two national restaurant chains (including Chipotle Mexican Grill) adopted PURE® Hard Surface disinfectant as a food safety solution.
We are very pleased that for the first time quarterly sales of PURE Hard Surface disinfectant exceeded $500,000. With the adoption of Chipotle, we believe sales of PURE Hard Surface will accelerate in the coming quarters and beyond.
Balance Sheet Remains Strong
As of October 31, 2016, PURE had a cash balance of $4.1 million with no long term debt.
In May 2016, PURE raised $1.27 million from the exercise by all of the holders of the 2,820,670 warrants expiring May 23, 2016.
In October, 2015, PURE closed a $6 million private placement with strategic lead investor Franchise Brands LLC. This is Franchise Brands’ second investment in PURE.
In November 2015, PURE completed the second and final closing of a follow-on private placement financing with its existing investors, raising $2 million to support its operations.
These financings greatly boosted the company’s balance sheet. More importantly, the transactions further validate the company’s SDC technology.
With the PURE Control first order in calendar 1Q17, we believe the company could break even in the next 12 to 18 months.
Current cash combined with cash flow generated from operations will support the Company's operations and business plan through end of calendar 2017 according to our financial model.
For a free copy of the full research report, please email scrinvestors@zacks.com with PURE as the subject.
SUBSCRIBE TO ZACKS SMALL CAP RESEARCH to receive our articles and reports emailed directly to you each morning. Please visit our website for additional information on Zacks SCR and to view our disclaimer.