CEA Industries Inc. Q1 Revenue Increases Significantly YoY, What About Gross Profit?

CEA Industries Inc. CEAD announced its Q1 2023 financial results, showing a significant increase in net revenue. In the three months ended March 31, 2023, the company achieved a net revenue of $4.7 million, compared to $1.7 million in the same period of 2022.

Q1 2023 Highlights

• In the first quarter of 2023, net bookings amounted to $0.8 million, experiencing a decline from $2.1 million in the same period of the previous year. The quarter-end backlog also decreased to $1.9 million, in contrast to $11.2 million in 2022.
• Gross profit in the first quarter of 2023 increased to $0.9 million compared to $0.1 million for the same period in 2022. Gross margin increased significantly to 18.2% compared to 5.2% in the year-ago period.
• Operating expenses in the first quarter of 2023 decreased 24% to $1.3 million compared to $1.7 million for the same period in 2022.
• Net loss in the first quarter of 2023 improved to $0.4 million or $(0.05) per share, compared to a net loss of $1.4 million or $(0.41) per share for the same period in 2022.
• Cash and cash equivalents were $15.9 million on March 31, 2023, compared to $18.6 million on December 31, 2022, while working capital decreased by $0.2 million during this period. On March 31, 2023, CEA Industries remained debt free.

“Q1 results reflect the completion of some previously delayed projects as well as the successful implementation of our cost-cutting initiatives,” said Tony McDonald, chairman and CEO of CEA Industries. “We experienced double-digit growth in revenue and material operating expense savings. Although these results are a step in the right direction, we recognize the market continues to combat pricing and inflationary pressures affecting both consumers and operators.

Outlook

According to McDonald, the company's main focus moving forward is to maintain efficiency and secure new contracts in both the cannabis and traditional agriculture sectors.

“Given the challenged environment over the past year, our net bookings have been limited in recent quarters, which will have an adverse effect on future revenue. However, with our strong liquidity position and prudent approach to capital allocation, we believe we are well-equipped to navigate the current environment and deliver value to both our customers and shareholders,” McDonald concluded.

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