Financial Data and Key Metrics Changes - Revenue for Q3 2025 was $14.5 million, a decrease of 14% year-over-year, attributed to a general softening in the industry and inventory adjustments by customers [18][19] - Gross profit was $3.4 million, down from $6.1 million in Q3 2024, with a gross margin of 23% compared to 36% for the same period last year [18][19] - The company reported a net loss of $1.1 million compared to net income of $3 million in Q3 2024, with adjusted EBITDA showing a loss of $435,000 compared to a profit of $3.6 million in the previous year [20] Business Line Data and Key Metrics Changes - The company has seen a shift in open orders, which represent the total value of customer orders, increasing to $64 million in Q3 2025 from $34 million in Q3 2024 [18] - The complexity of product design and manufacturing has been highlighted as a challenge, impacting profitability and operational efficiency [11][12] Market Data and Key Metrics Changes - The beauty industry is experiencing a slowdown, with consumer sentiment affecting inventory levels and lead times from brand partners [27][75] - Despite the overall market softness, the segment for SPF-infused beauty products is growing faster than the industry average, indicating a potential area for growth [75] Company Strategy and Development Direction - The company aims to maintain its leadership in the mineral-based beauty industry, focusing on scientific excellence and innovation [6][7] - Recent organizational changes have been made to improve product design, labor efficiency, and inventory control, which are expected to enhance profitability [11][14][15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to grow at a multiple of the industry's growth rate, despite the current challenges [10][27] - The leadership transition is seen as a positive step towards addressing operational issues and improving overall performance [4][9] Other Important Information - The company has established over 90 globally issued patents and has won multiple awards for product and technology innovation [6] - Significant improvements in labor efficiency have been noted, with a reduction in average labor cost per unit by close to 25% year-over-year [14] Q&A Session Summary Question: Concerns about repeated mistakes and sales outlook - Management acknowledged the need to address inventory management issues and expressed confidence in future revenue growth despite current challenges [26][27] Question: Delay in Q3 earnings release - The delay was attributed to the new leadership team wanting to ensure accuracy in reporting [30] Question: Expectations for Q4 sales and margins - Management expects an improvement in sales for the full year compared to 2024, with a positive outlook for Q4 [35] Question: Indirect costs and SG&A expenses - Management indicated that the current SG&A expenses reflect ongoing investments in leadership and operations, with some one-time costs not expected to recur [58] Question: Future margin expectations - Management refrained from providing specific guidance for 2026 but indicated a target of 30% as a floor for margins, with aspirations for higher levels in the future [64][65]
Solesence Inc(SLSN) - 2025 Q3 - Earnings Call Transcript