BioLargo Inc. (BLGO:OTCQX) posted a net loss for 2024, but its sales continue to increase and the company is making notable progress toward commercializing several of its technologies, reported Oak Ridge Financial Analyst Richard Ryan in an April 3 research note.
"We believe that newsworthy events are likely within several of BioLargo's segments in the relatively near term, that a rewrite of the story is at hand," Ryan wrote.
This cleantech and life sciences company invents, develops and commercializes innovative platform technologies to solve challenging environmental problems including PFAS contamination, advanced water and wastewater treatment, industrial odor and volatile organic compounds control, air quality control and infection control.
35.7% Return Implied
Oak Ridge maintained its $0.38 per share price target on BioLargo, now trading at about $0.28 per share, noted Ryan. From this price, the return to target is 35.7%.
The company remains a Buy.
What the Numbers Show
Ryan reviewed the highlights of BioLargo's Q4/24 and full-year 2024 (FY24) financial results. Q4/24 revenues were $3.65 million ($3.65M), down from $4.37M a year ago and down from $4.4M in Q3/24.
Regarding FY24, sales were $17.8M, up 45% year over year from $12.2M. Pooph sales specifically were about $13.7M, comprising about 77% of total revenues, up from about $10M in 2023. The odor control segment generated operating income of $5.9M, or a 38% margin, in FY24.
Overall, BioLargo fared better in 2024 than in 2023, with a net loss of $4.3M versus $4.6M previously. Clyra Medical Technologies Inc., BioLargo's majority owned subsidiary, accounted for $3.5M of that total loss.
At year-end 2024, BioLargo had a solid balance sheet with $3.5M in cash, $593,000 in debt and $6.1M in shareholder equity.
Pooph Drives Revenues
Pooph, a line of pet odor eradicating products, drives BioLargo's topline performance, noted Ryan. Total Pooph sales have grown in just over three years to about $45−50M, and more pet-related products have emerged, including Pooph Dog & Cat Wipes, Puppy Pads and Litterizer. According to management, Pooph products are in about 35,000–40,000 retail outlets.
The market opportunity for Pooph exceeds $100M, and BioLargo is to receive 20% of any future exit.
"Perhaps Pooph is the rising tide that lifts other initiatives toward commercialization and potentially a strategic exit," Ryan wrote.
Financial Game Changers
The analyst highlighted that commercialization is getting close for a couple of BioLargo's segments, and it could being a financial turning point for the company. Thus far, given its hub-and-spoke model, the capital required to invent, prove and partner the company's technologies "has required patience," Ryan wrote. Historically, BioLargo has been in a cash burning cycle, resulting in share dilution for both parent company and subsidiary. Whereas the business model allows BioLargo to conserve capital and diversify risk, it also takes control of many business aspects away from management.
Next up for potential commercialization are Bioclynse, Clyra's wound-healing irrigation certified by the U.S. Food and Drug Administration, and BioLargo's proprietary PFAS treatment technology, Aqueous Electrostatic Concentrator.
Clyra is continuing discussions with potential major technology partners to distribute its patented copper-iodine wound irrigation solution. Last month, this firm and its unnamed distribution partner's two-day inspection of Keystone Industries' manufacturing facility and capabilities confirmed Keystone can produce the product at scale. The market opportunity with this product is about $1 billion ($1B), noted Ryan.
As for its PFAS remediation technology, BioLargo is targeting this spring or summer to install it for a municipal drinking water project in Stockholm, N.J. The pipeline of PFAS opportunities is large and keeps expanding as prospective customers and partners become more at ease with the company's technology and as the Environmental Protection Agency releases final remediation regulations. The opportunity in existing markets is $1B-plus, and new markets keep emerging.
"The large emerging market for PFAS removal and BioLargo's growing validation in this opportunity should not be overlooked," Ryan wrote.
Cell Testing to Start Soon
Progress also continues on BioLargo's liquid sodium cells for energy storage batteries, noted Ryan. BioLargo started prototyping its cells for third party testing and validation, which could happen in the near term, and for refining the manufacturing process. Testing and validation must be done before viability and scalability can be determined. Management, believing the chemistries for its batteries are superior to those of other battery types, is assessing how BioLargo can compete in the long duration energy storage market.
"BioLargo's strategy is to sell factories, not batteries, and this puts them in a position to receive a royalty (about 6%) and carried interest on the project," Ryan wrote. [The] capital-efficient factory model projects [a] $2.5B-plus market opportunity."
Multiple Shots on Goal
Ryan pointed out that each of BioLargo's technologies can stand on its own, so it is important to analyze each one and its market opportunity individually.
"BioLargo has a unique diversified portfolio of solutions that can address the needs of very large global end markets, thus allowing the company to have 'many shots on goal," Ryan wrote. "As you track the progress of its technology divisions, one can notice that BioLargo is losing the 'Rodney Dangerfield stigma' (i.e.,) wherein it gets little respect. As a testament to its science/technologies, BioLargo's reputation is clearly rising."
Revenue Expectations
Looking ahead, Ryan wrote, the trend of lower Pooph sales in recent quarters is expected to continue in Q1/25 then reverse in H2/25, as BioLargo's partner Ikigai is readying for another marketing campaign.
On the other hand, BioLargo's engineering segment has seen an uptick in service-related sales as industrial polluters, looking to find PFAS remediation solutions, are consulting with the company. This should offset slightly dampened Pooph sales this year.
For FY25, Oak Ridge forecasts BioLargo's revenue to be $18M, its gross margin to be about 46% and its operating expenses to be flat, at $12.2M, the analyst pointed out.
More on The Stock
BioLargo has 301.3 million shares outstanding.
Its market cap is $84.4M. Its 52-week range is $0.16–0.37 per share.
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