CEA Industries Inc. Reports Third Quarter 2024 Results
Rhea-AI Summary
CEA Industries reported Q3 2024 financial results with revenue of $0.4 million, down from $0.9 million in Q3 2023. The company posted a net loss of $0.7 million or $(0.94) per share, showing slight improvement from a $0.8 million loss in Q3 2023. Net bookings increased to $0.5 million, while quarter-end backlog decreased to $0.4 million. The company maintained $10.3 million in cash and remains debt-free. Management announced further cost reduction measures including headcount reductions and paused product development while the Board explores strategic alternatives including potential sale, merger, or company dissolution.
Positive
- Slight improvement in net loss to $0.7M from $0.8M YoY
- Strong cash position of $10.3M with zero debt
- Net bookings increased to $0.5M from $0.4M YoY
- Reduced variable costs as percentage of revenue
Negative
- Revenue declined 57% to $0.4M from $0.9M YoY
- Gross loss of $70,000 in Q3 2024
- Working capital decreased by $2.0M since December 2023
- Backlog decreased to $0.4M from $0.5M YoY
- Cash position reduced from $12.5M to $10.3M since December 2023
Insights
The Q3 2024 results paint a concerning picture for CEA Industries. Revenue plummeted to
The
Louisville, Colorado, Nov. 14, 2024 (GLOBE NEWSWIRE) -- CEA Industries Inc. (NASDAQ: CEAD, CEADW) (“CEA Industries” or the “Company”), is reporting results for the three months ended September 30, 2024.
Third Quarter 2024 Financial Summary (in $ thousands, excl. margin items):
| Q3 2024 (unaudited) | Q2 2024 (unaudited) | Q3 2023 (unaudited) | |||||||
| Revenue | $ | 391 | $ | 1,761 | $ | 914 | |||
| Gross Profit (Loss) | $ | (70 | ) | $ | 180 | $ | (104 | ) | |
| Operating Expenses | $ | 677 | $ | 657 | $ | 703 | |||
| Net Income/(Loss) | $ | (740 | ) | $ | (470 | ) | $ | (799 | ) |
“Throughout 2024, we have maintained a disciplined approach to cost management, prioritizing capital preservation as we work through our remaining project backlog,” said Tony McDonald, Chairman and CEO of CEA Industries. “In alignment with our commitment to shareholders, during the third quarter we made further reductions in headcount, paused product development, and scaled back business development efforts to maintain our strong balance sheet.
“As previously announced, the Board of Directors continues their examination of strategic alternatives, including a sale, merger, special dividend, or other potential strategic or financial transaction, including a dissolution of the Company whereby cash on the balance sheet would be returned to shareholders after adequate provision for outstanding corporate obligations. We will continue to prudently manage our capital in support of our ongoing strategic review process and look forward to providing an update in the coming months.”
Third Quarter 2024 Financial Results
Revenue in the third quarter of 2024 was
Net bookings in the third quarter of 2024 increased to
Gross loss in the third quarter of 2024 improved to
Operating expenses in the third quarter of 2024 remained flat at
Net loss in the third quarter of 2024 improved to
Cash and cash equivalents were
About CEA Industries Inc.
CEA Industries Inc. (www.ceaindustries.com) provides a suite of complementary and adjacent offerings to the controlled environment agriculture industry. The Company’s comprehensive solutions, when aligned with industry operators’ product and sales initiatives, support the development of the global ecosystem for indoor cultivation.
Forward Looking Statements
This press release may contain statements of a forward-looking nature relating to future events. These forward-looking statements are subject to the inherent uncertainties in predicting future results and conditions. These statements reflect our current beliefs, and a number of important factors could cause actual results to differ materially from those expressed in this press release, including the factors set forth in “Risk Factors” set forth in our annual and quarterly reports filed with the Securities and Exchange Commission (“SEC”), and subsequent filings with the SEC. Please refer to our SEC filings for a more detailed discussion of the risks and uncertainties associated with our business, including but not limited to the risks and uncertainties associated with our business prospects and the prospects of our existing and prospective customers; the inherent uncertainty of product development; regulatory, legislative and judicial developments, especially those related to changes in, and the enforcement of, cannabis laws; increasing competitive pressures in our industry; and relationships with our customers and suppliers. Except as required by the federal securities laws, we undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise. The reference to CEA’s website has been provided as a convenience, and the information contained on such website is not incorporated by reference into this press release.
Non-GAAP Financial Measures
To supplement our financial results on U.S. generally accepted accounting principles (“GAAP”) basis, we use non-GAAP measures including net bookings and backlog, as well as other significant non-cash expenses such as stock-based compensation and depreciation expenses. We believe these non-GAAP measures are helpful in understanding our past performance and are intended to aid in evaluating our potential future results. The presentation of these non-GAAP measures should be considered in addition to our GAAP results and are not intended to be considered in isolation or as a substitute for financial information prepared or presented in accordance with GAAP. We believe these non-GAAP financial measures reflect an additional way to view aspects of our operations that, when viewed with our GAAP results, provide a more complete understanding of factors and trends affecting our business.
Investor Contact:
Sean Mansouri, CFA
Elevate IR
info@ceaindustries.com
(720) 330-2829
CEA Industries Inc.
Condensed Consolidated Balance Sheets
(in US Dollars except share numbers)
| September 30, | December 31, | |||||||
| 2024 | 2023 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current Assets | ||||||||
| Cash and cash equivalents | $ | 10,295,159 | $ | 12,508,251 | ||||
| Accounts receivable, net | 71,240 | 18,655 | ||||||
| Contract assets, net | 224,414 | 224,414 | ||||||
| Inventory, net | 24,680 | 296,404 | ||||||
| Prepaid expenses and other | 421,260 | 313,115 | ||||||
| Total Current Assets | 11,036,753 | 13,360,839 | ||||||
| Noncurrent Assets | ||||||||
| Property and equipment, net | 9,605 | 38,558 | ||||||
| Intangible assets, net | 1,830 | 1,830 | ||||||
| Deposits | 14,747 | 14,747 | ||||||
| Operating lease right-of-use asset | 273,375 | 356,109 | ||||||
| Total Noncurrent Assets | 299,557 | 411,244 | ||||||
| TOTAL ASSETS | $ | 11,336,310 | $ | 13,772,083 | ||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| LIABILITIES | ||||||||
| Current Liabilities | ||||||||
| Accounts payable and accrued liabilities | $ | 364,154 | $ | 624,724 | ||||
| Deferred revenue | 468,963 | 499,800 | ||||||
| Current portion of operating lease liability | 133,127 | 126,724 | ||||||
| Total Current Liabilities | 966,244 | 1,251,248 | ||||||
| Noncurrent Liabilities | ||||||||
| Operating lease liability, net of current portion | 166,685 | 259,627 | ||||||
| Total Noncurrent Liabilities | 166,685 | 259,627 | ||||||
| TOTAL LIABILITIES | 1,132,929 | 1,510,875 | ||||||
| Commitments and Contingencies (Note 6) | - | - | ||||||
| SHAREHOLDERS’ EQUITY | ||||||||
| Preferred stock, | - | - | ||||||
| Common stock, | 8 | 7 | ||||||
| Additional paid in capital | 49,520,970 | 49,451,493 | ||||||
| Accumulated deficit | (39,317,597 | ) | (37,190,292 | ) | ||||
| Total Shareholders’ Equity | 10,203,381 | 12,261,208 | ||||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 11,336,310 | $ | 13,772,083 | ||||
CEA Industries Inc.
Condensed Consolidated Statements of Operations
(in US Dollars except share numbers)
(Unaudited)
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Revenue | $ | 390,817 | $ | 913,571 | $ | 2,386,023 | $ | 6,659,858 | ||||||||
| Cost of revenue | 460,970 | 1,017,634 | 2,430,751 | 5,831,953 | ||||||||||||
| Gross (loss) profit | (70,153 | ) | (104,063 | ) | (44,728 | ) | 827,905 | |||||||||
| Operating expenses: | ||||||||||||||||
| Advertising and marketing expenses | 450 | 21,551 | 13,630 | 256,965 | ||||||||||||
| Product development costs | - | - | - | 76,487 | ||||||||||||
| Selling, general and administrative expenses | 676,069 | 681,448 | 2,089,328 | 2,452,305 | ||||||||||||
| Total operating expenses | 676,519 | 702,999 | 2,102,958 | 2,785,757 | ||||||||||||
| Operating loss | (746,672 | ) | (807,062 | ) | (2,147,686 | ) | (1,957,852 | ) | ||||||||
| Other income (expense): | ||||||||||||||||
| Other income (expense), net | - | - | - | 7,778 | ||||||||||||
| Interest income (expense), net | 6,269 | 8,043 | 20,381 | 26,042 | ||||||||||||
| Total other income (expense) | 6,269 | 8,043 | 20,381 | 33,820 | ||||||||||||
| Loss before provision for income taxes | (740,403 | ) | (799,019 | ) | (2,127,305 | ) | (1,924,032 | ) | ||||||||
| Income taxes | - | - | - | - | ||||||||||||
| Net loss | $ | (740,403 | ) | $ | (799,019 | ) | $ | (2,127,305 | ) | $ | (1,924,032 | ) | ||||
| Loss per common share – basic and diluted | $ | (0.94 | ) | $ | (1.19 | ) | $ | (2.92 | ) | $ | (2.86 | ) | ||||
| Weighted average number of common shares outstanding, basic and diluted | 791,580 | 673,031 | 729,333 | 672,904 | ||||||||||||
CEA Industries Inc.
Condensed Consolidated Statements of Cash Flows
(in US Dollars except share numbers)
(Unaudited)
| For the Nine Months Ended September 30, | ||||||||
| 2024 | 2023 | |||||||
| Cash Flows From Operating Activities: | ||||||||
| Net loss | $ | (2,127,305 | ) | $ | (1,924,032 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and intangible asset amortization expense | 16,328 | 22,476 | ||||||
| Share-based compensation | 69,478 | 177,427 | ||||||
| Provision for doubtful accounts (bad debt recovery) | (40,094 | ) | (2,056 | ) | ||||
| Provision for excess and obsolete inventory | 36,839 | 111,123 | ||||||
| Loss on disposal of assets | 12,625 | 100 | ||||||
| Operating lease expense | 82,734 | 79,705 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | (12,490 | ) | (267,842 | ) | ||||
| Inventory | 234,885 | (77,808 | ) | |||||
| Prepaid expenses and other | (108,147 | ) | 1,166,170 | |||||
| Accounts payable and accrued liabilities | (260,570 | ) | (635,373 | ) | ||||
| Deferred revenue | (30,836 | ) | (3,863,683 | ) | ||||
| Operating lease liability, net | (86,539 | ) | (80,716 | ) | ||||
| Net cash used in operating activities | (2,213,092 | ) | (5,294,509 | ) | ||||
| Cash Flows From Investing Activities | ||||||||
| Proceeds from the sale of property and equipment | - | 200 | ||||||
| Net cash provided by investing activities | - | 200 | ||||||
| Cash Flows From Financing Activities | ||||||||
| Net cash provided by financing activities | - | - | ||||||
| Net change in cash and cash equivalents | (2,213,092 | ) | (5,294,309 | ) | ||||
| Cash and cash equivalents, beginning of period | 12,508,251 | 18,637,114 | ||||||
| Cash and cash equivalents, end of period | $ | 10,295,159 | $ | 13,342,805 | ||||
| Supplemental cash flow information: | ||||||||
| Interest paid | $ | - | $ | - | ||||
| Income taxes paid | $ | - | $ | - | ||||
| Non-cash investing and financing activities: | ||||||||
| Options issued for accrued equity compensation liability | $ | - | $ | 89,970 | ||||
FAQ
What was CEA Industries (CEAD) revenue in Q3 2024?
How much cash does CEA Industries (CEAD) have as of September 30, 2024?
What strategic alternatives is CEA Industries (CEAD) considering in 2024?
What was CEA Industries (CEAD) net loss per share in Q3 2024?
