Good day, and welcome to the Trinity Biotech Second Quarter Financial Results Conference Call. All participants are in a listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. Please note, that this event is being recorded. I'd now like to turn the conference over to Kevin Tansley, CFO. Please go ahead, sir.

Thank you very much. Before we begin with our prepared remarks today, we submit for the record the following statements. Statements made by the management team of Trinity Biotech during the course of this conference call that are not historical facts are considered to be forward-looking statements subject to risks and uncertainties. The Private Securities Litigation Reform Act of 1995 provides a Safe Harbor for such forward-looking statements. The words believe, expect, anticipate, estimate, will and other similar statements of expectation identify those forward-looking statements. Investors are cautioned that such forward-looking statements involve risks and uncertainties, including, but not limited to, the results of research and development efforts; the effect of regulation by the United States Food and Drug Administration and other agencies; the impact of competitive products, product development, commercialization and technological difficulties; and other risks detailed in the company's periodic reports filed with the Securities and Exchange Commission. Forward-looking statements reflect management's view only as of today. The company undertakes no obligation to publicly release the results of any revision to these forward-looking statements. In addition, there is uncertainty about the spread of the COVID-19 virus and the impact it will have on the company's operations, the demand for it's products, global supply chains and economic activity in general. So now, I will take you through the results for quarter two 2020. Beginning with our revenues, total revenues for the quarter were $16 million compared to just over $22.5 million in quarter two last year. Ronan will provide more details on the quarter two's revenues later in the call. So I will move on now and discuss the other aspects of the income statement. Our gross margin this quarter was 42.9%, which represents an improvement on the 42% reported in quarter two last year. This improvement was due…

Thanks and I am going to review our revenues for quarter two before opening the call to question-and-answer session. Our revenues for quarter two were $16 million compared to $22.5 million in the corresponding quarter last year which is a decrease of 29%. Point-of-care revenues of $1.3 million compared to $2.1 million in the corresponding quarter, which is a decrease of 41%. Clinical Laboratory revenues were at $14.8 million compared to $20.3 million in the corresponding quarter last year, which is a decrease of 27%. Moving back at point-of-care, our revenues decreased by 41% when compared to the corresponding quarter and the consequence of COVID which we saw the suspension or reduction of HIV testing programs in certain countries in Africa and this combined with supply chain difficulties caused by the major reductions in air traffic to Africa as well as general uncertainty as to how quickly COVID would spread throughout Africa led to a slowdown in orders. However, during quarter three we've seen a return to more normal levels of ordering and expect the outcome for quarter three to be marginally sort of normal. Moving on to our Clinical Laboratory, our revenues declined 27.5% to $14.8 million. We saw a significant reduction in our hemoglobin and in our autoimmune business due entirely to COVID. The consequence of COVID in many countries testing for nonacute conditions were severely reduced as patients were reluctant to visit their physicians or hospitals and run the risk of contracting COVID and then subsequently and consequently that they would opt to do fair or forgo such testing. It therefore comes as no surprise that we saw a sudden falloff in diabetes and also autoimmune testing during the quarter. For autoimmunity, this first manifested itself in our reference laboratory in Buffalo by testing volumes declined for…

Thank you. We will now begin the question-and-answer session. [Operator Instructions] And our first question will come from Jim Sidoti with Sidoti & Company. Please go ahead.

Good afternoon, Ronan and Kevin. Can you hear me?

Hi, Jim, how are you?

Hi, Jim.

Yes, thank you. I hope you're well. I just want to be clear. Did you say you expect third quarter revenue to be $28 million?

Yes, $28 million.

So that represents about 14% top line growth from a year-ago which was also an up quarter. You haven't had a double-digit top line growth quarter in a couple of years. And we're in the middle of the pandemic, what's driving that growth?

Yes, well I mean, I think it's probably something like a 40% growth in the context of our current run rate, bearing in mind that I'd already indicated that autoimmune disease, HIV and diabetes have not returned to full levels that for example, our instrumentations are supposed to be reasonably modest in quarter three. So, I mean it reflects the fact that basically, we're selling a new ELISA antibody test that PCR transport mediums. We're selling more infectious disease products like Legionella Urinary Antigen and Strep pneumonia and Strep selling a lot of monoclonal antibodies with COVID related antibodies. So things accumulation those factors is giving rise to this. So again, that'd be five weeks to go to the end of the quarter, but I think we feel confident in that number.

Do you think those trends continue for the next few months? Or do you think that is, it could go up or down depending on what happens with COVID?

I think for quarter four, it's likely to accelerate. And quarter one, it's pretty difficult to foresee.

Okay, but can you remind me of 2020?

I think accelerations -- deceleration is more likely.

It sounds like for the remainder of 2020, you're expecting double-digit top line growth year-over-year?

More than that, yes.

Yes, okay. All right. And then on the expense side, I know you said you received the money for PPP money. Is there any effect on the income statement from that? Does that offset any expenses? Or is that something that will happen later on?

That's something that will happen later on. So at this point, I suppose that the scheme is relatively new, the rule has been changing somewhat since it was introduced. There's a formal process to go, we've gone through with the lending bank and then in turn with the government agency, and just given all that at this point, we've taken a prudent approach and not recognized any forgiveness at this point. And we'll just wait until there's greater certainty as to exactly how that plans out. So at the moment the loans are included in our balance sheet as a liability. Obviously, as I mentioned in my remarks, I believe that high percentage, if not all of them will be forgiven on the basis that we did bring back all of our furloughed employees in the U.S. immediately after receipt of the loan financing. So from our point of view, we've held up our end of the bargain.

Okay, and can you give us an update on the timetable for the approval practice for both the screening test in Africa and then for the point-of-care immunity test, the COVID immunity test or I'm sorry, the COVID antibody test here in the U.S.?

Okay, Trin-Screen in Africa has just been held up because we can't run any trials at the moment. So just waiting to finish off in two of the three countries, we haven't been able to get going again, we're hoping to get going in next month or so. But we don't have complete clarity on that. And then in respect of the rapid test, and we're virtually completed at the moment, we're doing validations. But the other thing that has to be done is obviously it has to be transferred into manufacturing and mold issues, et cetera, et cetera. So they're taking time, and then that new mold should be validated, et cetera. So because remember, it's going on to automated systems. So what's actually holding is up more than anything else at the moment probably is actually the manufacturing side of things. But I think we'll be clear. We think we were satisfied we would be clear before year-end. So I mean the EUA, I think will come probably comfortably enough, probably sometime in November, the real issue is how quickly we can actually get off manufacturing and scale.

And then last one for me for the IgG test that is already received the EUA approval, are you receiving inquiries regarding that? And when do you expect sales to commence?

We have huge interest and it's not just in the USA but around the world. And so we have huge interest. And yes, it's looking very promising. We have we also of course are going to be CE Mark will enable us to sell in Europe and we hope to have that within the next six weeks.

So does your revenue guidance with $28 million of revenue for the September quarter? Does that include any sales for that test?

Yes, it does, yes.

Okay, thank you.

Yes, thanks.

Our next question will come from Paul Nouri with Noble Equity. Please go ahead.

Hey, good morning.

Good morning, Paul.

Did you say that the annualized impact of the Kansas City plant issue is $4 million? Did I miss here though?

$4.5 million.

Okay. And the company issued a shelf statement a little while ago. What are the different financing options you're considering? Is ATM one of them where you can issue shares at the market?

With the first thing to say on that, Paul is that we've had a policy for some time now as always having a live shelf registration. The reason we put the shelf in place is because the previous one has expired and so in keeping with the policy to always have a shelf, we just placed one at the first available opportunity, we put in a whole range of broad categories of financing the broadest as such as is the norm in these situations when you're doing your shelf registration, so I wouldn't necessarily read anything into the fact that we put a registration there. And as I say again, it's the broadest possible range of raising just and keeping with the spirit of those types of documents.

So Paul, just to be clear. I mean it's our policy to have a shelf registration in place as I think most companies would do. And so the fact that we actually did that filing in no way reflects an intention to actually raise money. In fact, it's not our intention specifically not our intention to do so this kind of share price.

Okay. All right. Well, thank you.

Thanks, Paul.

Our next question will come from Charles [ph]. Please go ahead.

Hey, gentlemen, thank you for taking my call. Excellent job on the numbers and great job on basically terminating around the pandemic. Hopefully everyone is staying safe over there. I just have a couple of quick questions. The first one is in New York facility. Can you tell us a little bit about what's going on over there? And what the status on how the ramp-up over based on?

We didn't quite hear you there. Can you just give us a little bit more on the last -- on just the exact question itself, please?

Okay. The New York facility that you guys are actually working on. What is the status on that? And actually, how much is the ramp-up going on now and what do you plan on doing with it over there?

Charles, we have two facilities in New York with one in Jamestown. And we have one in Buffalo, right.

The one is Jamestown I believe.

Yes, but we're not really ramping-up, I mean particular ramp-up. But that's been part of the group for quite some time is the key part of our operations, it's our main infectious diseases and facilities where we make all our ELISA production search. It will be where we make our ELISA IgG antibody tests for COVID. But it's also a very established plant to such and has been part of the group for 20 years in the best way.

I mean, it's a very busy plant at the moment because we just talked about a huge increase in infectious disease revenues. And of course, a lot of -- an awful lot of that is happening in that particular plant. So maybe that answers the question.

Yes and as far as your employee count, I know you guys pulled back on your USA employees. Do you find you have enough actual employees to handle with what the current job and revenue going right now going forward is?

Yes, I mean, we have I mean, we have probably, yes. What happened was when the pandemic hits, we've furloughed a lot of employees in the USA, and then the U.S. government brought in a program, and they send us a check for $4.5 million. And we just we brought everybody back in. Now since then particularly in Jamestown and New York, we've got really, really busy with the combination of the antibody test, the development of it, and then now the manufacturing of it with the PCR transport medium as well. So we're busy. So we have brought on extra people, I don't know, but it's like 15 people something maybe 20. And therefore we found it difficult to get people because the pandemic payments are quite high. But so we have probably -- we have probably marginally more employees than at the start of the pandemic in the USA.

Excellent, I know this question if you can give me some color on your burn rate going forward, obviously your revenue is going to be increasing. Would you expect your cash burn to stay similar to what it is go down, go up. I mean with your revenues going up increasing?

You would have heard on previous calls talk about the fact that we've been making cost savings also we did closed our facility in Carlsbad in California. So we've been working very hard to get cash flow breakeven notwithstanding an uptick in revenues, but the fact that there's an uptick in revenues, so the fact that there's an uptick in revenues coinciding with those, I think we're very well positioned to meet our objective becoming cash flow positive. So I don't believe we're going to be burning what we would have in the past.

So would you feel comfortable with your current cash level right now is that we get trying to color you're trying to put out?

We would anticipate that our cash balances will increase in coming quarters.

Excellent, well keep up the good work gentlemen, I think everything's looking forward and hopefully, we can make a big impact on the COVID-19 because it looks like a lot of good product going out there. Thanks for taking the call.

Thank you.

Thank you.

Our next question will come from Jim Sidoti with Sidoti & Company. Please go ahead.

Hi, just want to follow-up on the issue with Ultra, does the fact you have the warning letter, does that prevent you from shipping either the device or the consumable for the device in the near-term?

No Jim, I mean the instruction, we got an FDA inspection on the factory at the end of January, first few days of February, right. And then we received the letter now, right. So I mean, yes, there's no question about nothing as to ship product, if it was something urgent, I think they would have written to us sooner.

Okay. And you said, I think that by the end of the year, you're hoping to have Premier approved in the U.S., and that would basically absolutely alter anyway? Is that correct?

To be clear, what we said was -- what we said was that we actually hope to basically by the end of November submit, so I mean it could take three months, then I think it'll be probably started in early next year, but before we would actually -- before we'd actually have an approval, and we'll just put one word of caution with all of that, and that is that we have been -- we're waiting to do actually it's trial, right. And we can't get in because of COVID at the moment right now, that I see in the first of September, but it possible I can change, has changed a couple of times, I think we will get in. But the point I'm making is, it's very difficult to do clinical trials at the moment. I mean, hospitals don't want outside influences understandably. And that's why again, for example, we have sold very few diabetes instruments over the past number of months because you really don't want engineers wandering around your hospital installing instrumentation and similarly, you're not going to welcome outside trials. So that's just the one caveat, I put on that.

Okay. And then the last thing, I assume there's some remediation expense related to the back and forth with the FDA. Can you just give an order of magnitude, are you talking 10s of 100s, 100s of 1000s, millions of dollars to clear this up?

I think it's probably like couple hundred thousand dollars, maybe we're going to put extra regulatory people and all that in, we will be working on our technical files, things like that. But I mean, it's not a couple hundred thousand maybe $200,000 or $300,000 that kind of money, but it's not that magnitude.

Okay. All right, thank you very much.

Yes, sorry Jim, just to point out, yes I mean it was always our intention to replace the old reason we developed the resolution was to replace the Ultra, I mean as you've heard to-date Ultra is an instrument that we inherited when we bought the business in 2005. So it's had a good run and so the resolution is a much better instrument, you know as much more modern instruments. So, we would hope to enable a transfer from one to the other, but it needs to be negotiated.

I understand. All right, thank you.

Thanks, Jim.

Our next question will come from William Lapp, Investor. Please go ahead.

Good afternoon. Thank you for taking the call. I just have a quick question on the rapid test, is that something that has to be done at the Doctor's office? You know, if you have this rapid test like you do for HIV, how is that performed? Is that in a Doctor's office or can it be done at home or in a business, I'm not sure about that?

Bill, its Ronan here. It depend on the country but it would typically be done in a Doctor's office, in a clinic, in a dental practice. But bear in mind, all it involves is a spring-loaded lancet which you release and we get a drop of blood and then you operate and then you just add a drop wash solution, then you wait 12 minutes and it operates like a pregnancy test.

Great and that's exactly in that test, that test is what they're all saying they need. The rapid test, I mean they say if you get rapid test, as they say if you can do the rapid test, you can spot the infection first. You don't have to wait 10, 3 to 4 days to get it. There is people from Harvard that have been talking about it. So this rapid test could really be a windfall or could be really great. I mean you guys do with HIV. I'm just wondering it could be business even have it, so people come in, they can do a rapid test or does it -- you use that for care. Am I wrong?

I appreciate your support but you need to clarify one thing. It has a lot of insignificant utility and I know I went to the dentist a few weeks ago and I was made to do one of these tests and I had to pay like $80 of this antibody test. But bear in mind, this isn't an antibody test. So it's not but you got the current infection and rather that you had in the past.

Right, it isn't a molecular test, right.

But I have to say I was obliged to use it before, if you go to the dentist so it's going to be used a lot, because a lot of them around. Let me just point out that there has been a lot of negative publicity surrounding them and activations being made that they don't work and all of that. I can't speak for any other test rather than to say that our test has exhibited 95% sensitivity, but most importantly specificity of 98%, just over of 98% which we believe it is right up there.

[Operator instructions] Our next question will come from Sam Roboski with SER Asset Management. Please go ahead.

This will be the last question and we close the call after this.

Tell me how much money do you owe, what is the date of the obligation and the $28 million, did you say you to be cash flow positive and as long as you continue this into $28 million range, assuming you will continue to be cash flow positive. Thank you.

And so our total indebtedness is $99.9 million which is at the 4% bonds and it falls due in May 2022. Yes, but $28 million worth of revenue we would be significantly profitable and depending on working capital movements, would expect over period of number of quarters to be significantly cash flow positive, but it's just an element of building your dentist book first. You don't take the X number of days before you get paid, but basically yes, and that level of revenues would generates significant profitability and significant cash flow positive.

So would your 22, with the debt due in 2022 do have a plan have to pay this or you did a way to get closer to the timetable.

Well, with many thoughts on that and something we review all of the time, but we don't really go into all of our thoughts on that at this moment of time but we're very encouraged by the strong revenue that we're projecting for quarter three and which we see a sort of continuing and even being enhanced in quarter four.

Okay. Well good luck, hopefully you get to numbers and the cash flow positive and profitability. So you could -- the stock will give you more flexibility.

So at this stage there seems to be no more questions. Thank you to everybody and the floor to speaking to you again soon. Good afternoon.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.