FarmAnywhere
Financial Results Stock Market

CEA Industries Inc. Reports Third Quarter 2023 Financial Results

CEA Industries Inc. Reports Third Quarter 2023 Financial Results

Key Takeaways:

  1. CEA Industries reported a significant decrease in revenue in Q3 2023 compared to the same period in 2022.
  2. The company experienced a net loss, although it showed improvement from the previous year.
  3. Gross profit and margin declined due to lower revenue and proportionally higher fixed costs.
  4. Operating expenses decreased significantly due to reduced personnel, marketing, and product development costs.
  5. The company is exploring strategic alternatives, including a potential sale, merger, or other transactions.

Financial Performance Overview

CEA Industries Inc. (NASDAQ: CEAD, CEADW), a key player in the cannabis and controlled agricultural sectors, has released its financial results for the third quarter ending September 30, 2023. The company reported a challenging quarter with a notable decrease in revenue and gross profit but also showed some areas of cost improvement.

Revenue and Net Bookings

Revenue for Q3 2023 stood at $0.9 million, a steep decline from $5.1 million in the same period in 2022. This decrease is primarily attributed to lower bookings over the past year, reflecting fewer capital expenditures by cannabis operators in the markets CEA Industries serves. Net bookings for the quarter were $0.4 million, down from $2.2 million in the year-ago period, with the quarter-end backlog at $0.5 million compared to $6.8 million in 2022.

Gross Profit and Margin

The company’s gross profit for the quarter was a loss of $0.1 million, compared to a profit of $0.6 million in Q3 2022. The gross margin also declined to (11.4%) compared to 11.8% in the previous year. This decrease in gross margin was mainly due to lower revenue and the impact of fixed costs, such as services, engineering, manufacturing, and project management, becoming a more significant percentage of the reduced revenue.

Operating Expenses and Net Loss

Operating expenses in Q3 2023 decreased by 58% to $0.7 million, down from $1.7 million in the same period in 2022. This reduction was primarily due to decreased personnel and marketing costs, alongside lower product development expenses. The net loss for the quarter improved slightly to $0.8 million, or $(0.10) per share, compared to a net loss of $1.0 million, or $(0.13) per share, in Q3 2022.

Financial Position and Strategic Review

As of September 30, 2023, CEA Industries reported cash and cash equivalents of $13.3 million, a decrease from $18.6 million at the end of 2022. The company remains debt-free but experienced a decrease in working capital by $1.6 million during the period.

Tony McDonald, Chairman and CEO, highlighted the company’s focus on working through its backlog, mitigating operating expenses, and preserving cash. He also mentioned that the Board of Directors actively reviews strategic alternatives, including a potential sale, merger, or other strategic or financial transactions.

Photo by CRYSTALWEED cannabis on Unsplash

Leave a Reply

X
%d