Hour Loop(HOUR) - 2024 Q1 - Quarterly Results

Q1 2024 Performance Overview Financial Highlights & Management Commentary The company returned to profitability in Q1 2024 with a 17.2% revenue increase to $24.7 million and a net income of $1.1 million, attributing success to improved margins from enhanced inventory quality, operational efficiencies, and expense control, expressing cautious optimism for the remainder of the year despite economic uncertainty Q1 2024 vs Q1 2023 Key Metrics | Metric | Q1 2024 | Q1 2023 | Change | | :--- | :--- | :--- | :--- | | Net Revenues | $24.7 million | $21.1 million | +17.2% | | Net Income (Loss) | $1.1 million | ($1.2 million) | Turnaround to Profit | | Cash from (used in) Operating Activities | $0.5 million | ($3.3 million) | +$3.8 million | - Management stated that gross and operating margins improved due to efforts in enhancing inventory quality and efficiency, improving operational efficiency, and managing expenses[2] - Despite an uncertain economy, the company continues to see good product demand and is confident in its ability to deliver value to stakeholders[2] Detailed Financial Results Revenue grew to $24.7 million, driven by operational maturity, with gross margin significantly improving to 58.5% from 45.6% in the prior year due to better product costs and inventory management, while operating expenses as a percentage of revenue decreased slightly to 52.3%, contributing to a net income of $1.1 million ($0.03 per diluted share), a strong turnaround from a $1.2 million loss in Q1 2023 Q1 2024 vs Q1 2023 Performance Details | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net Revenues | $24.7 million | $21.1 million | | Gross Profit Percentage | 58.5% | 45.6% | | Operating Expenses (% of Net Revenues) | 52.3% | 53.2% | | Net Income (Loss) | $1.1 million | ($1.2 million) | | Diluted EPS | $0.03 | ($0.04) | - The 12.9 percentage point increase in gross margin was a function of improved product costs, enhanced inventory quality and efficiency, and efforts made on margin increase[4] - The decrease in operating expenses as a percentage of revenue reflected better management of storage fees and labor costs[6] Balance Sheet and Liquidity As of March 31, 2024, the company's cash and cash equivalents improved to $2.9 million from $2.5 million at year-end 2023, driven by profitability, while inventory levels decreased to $11.6 million from $14.3 million over the same period, indicating strong sales momentum during the first quarter Key Balance Sheet Items (as of) | Account | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $2.9 million | $2.5 million | | Inventories | $11.6 million | $14.3 million | - The increase in cash was mainly from the combination of an increase due to profitability and a decrease due to payments made to vendors[8] - The decrease in inventory represented good sales momentum in the first quarter of 2024[8] Full Year 2024 Financial Outlook Full Year 2024 Guidance Hour Loop projects full-year 2024 net revenue to be between $145 million and $172 million, which would represent 10% to 30% year-over-year growth, with net income for the full year expected to be in the range of $0.5 million to $2 million Full Year 2024 Financial Guidance | Metric | Guidance Range | Implied YoY Growth | | :--- | :--- | :--- | | Net Revenue | $145M - $172M | 10% - 30% | | Net Income | $0.5M - $2M | N/A | Consolidated Financial Statements Consolidated Balance Sheets The balance sheet as of March 31, 2024, shows total assets of $16.7 million and total liabilities of $11.2 million, resulting in total stockholders' equity of $5.5 million, compared to total assets of $19.6 million and equity of $4.5 million at the end of 2023, with the decrease in total assets primarily driven by lower inventory and accounts receivable, and the decrease in liabilities mainly due to reduced credit card and accounts payable balances Balance Sheet Summary (in millions) | Account | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Total Assets | $16.7 | $19.6 | | Cash and cash equivalents | $2.9 | $2.5 | | Inventory, net | $11.6 | $14.3 | | Total Liabilities | $11.2 | $15.1 | | Credit cards payable | $1.9 | $4.4 | | Total Stockholders' Equity | $5.5 | $4.5 | Consolidated Statements of Operations For the three months ended March 31, 2024, the company reported net revenues of $24.7 million and a net income of $1.1 million, a significant improvement from the same period in 2023, which saw revenues of $21.1 million and a net loss of $1.2 million, with the turnaround driven by a substantial increase in gross profit to $14.5 million from $9.6 million, which outpaced the rise in operating expenses Statement of Operations Summary (For the Three Months Ended, in dollars) | Metric | March 31, 2024 | March 31, 2023 | | :--- | :--- | :--- | | Revenues, net | $24,681,122 | $21,067,609 | | Gross profit | $14,452,206 | $9,615,702 | | Income (loss) from operations | $1,538,172 | ($1,612,259) | | Net income (loss) | $1,065,814 | ($1,235,244) | | Basic and diluted EPS | $0.03 | ($0.04) | Consolidated Statements of Cash Flows The company generated $0.5 million in cash from operating activities in Q1 2024, a substantial improvement from the $3.3 million used in Q1 2023, with this positive cash flow primarily driven by net income and favorable changes in inventory, which offset significant cash used to reduce credit card payables, resulting in an ending cash balance for the quarter of $2.9 million Cash Flow Summary (For the Three Months Ended) | Metric | March 31, 2024 | March 31, 2023 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $492,943 | ($3,289,076) | | Net cash used in investing activities | ($17,798) | ($3,379) | | Net change in cash and cash equivalents | $437,927 | ($3,287,798) | | Cash and cash equivalents at end of period | $2,922,080 | $1,274,791 | Company Information and Disclosures About Hour Loop, Inc. Hour Loop is a US-based online retailer primarily operating as a third-party seller on Amazon.com, managing over 100,000 SKUs across various categories using advanced software for inventory management, with a growth strategy focused on increasing its number of business managers, vendors, and SKUs - The company is an e-commerce retailer that generates practically all its revenue as a third-party seller on www.amazon.com[10](index=10&type=chunk) - Hour Loop manages more than 100,000 stock-keeping units (SKUs) and utilizes advanced software to identify product gaps and maintain stock[10] - The company's future growth strategy is to expand by increasing the number of business managers, vendors, and SKUs[10] Forward-Looking Statements & Investor Contact This section contains standard legal disclaimers regarding forward-looking statements, which are subject to various risks and uncertainties and are based on current estimates and assumptions, and also provides contact information for the finance department for investor inquiries - The press release includes forward-looking statements concerning business strategy and industry trends, which are subject to numerous conditions and risks[11] - Investor contact is provided via email: finance@hourloop.com[12]