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A4

ALPINE 4 HOLDINGS, INC. (ALPP)·Q1 2024 Earnings Summary

Executive Summary

  • ALPP did not release Q1 2024 results or hold a Q1 2024 earnings call; the company disclosed it was delinquent on its Q1 2024 Form 10‑Q and sought a Nasdaq hearing extension in late May 2024, so Q1 2024 financials are not available .
  • The most recent full financials are Q3 2023 (filed June 6, 2024): revenue $25.60M, net loss $(40.96)M driven by $33.3M non‑cash impairments; 9M23 operating cash flow was positive $2.08M, but a going‑concern warning and covenant waivers underscore liquidity risk .
  • Management’s Q1 timeframe updates focused on portfolio restructuring (Maintain/Invest/Divest/Close), including an approved wind‑down of TDI with expected 2024 non‑cash charges of $10–$12M and ~$0.5M transition costs; emphasis remains on RCA, QCA, Elecjet and GAC .
  • Near‑term stock reaction catalysts: catching up on SEC filings and remediation of controls, executing divestitures, and demonstrating margin/cash‑flow stability at core subsidiaries; risks include additional restatement work disclosed later in 2024 and refinancing near‑term debt maturities .

What Went Well and What Went Wrong

What Went Well

  • Alt Labs growth and mix improvement: segment revenue rose to $6.39M in Q3 2023 (+136% YoY), with gross profit up to $0.99M; management highlighted RCA’s deliberate margin focus despite lower revenue .
  • Positive 9M23 operating cash flow: ALPP generated $2.08M OCF through Sept 30, 2023, a swing from $(17.71)M in 9M22, reflecting working‑capital actions and cost control .
  • Management confidence on margin recovery: “as we proceed with our divestment plan for non‑performing subsidiaries, we expect our margins to increase in Q3 and Q4 2024,” CEO Kent Wilson (in 8‑K item referencing results update) .

What Went Wrong

  • Large non‑cash impairments and steep quarterly loss: Q3 2023 booked $14.9M goodwill and $18.4M intangible impairments; net loss was $(40.96)M .
  • Going‑concern uncertainty and covenant pressure: negative working capital, upcoming line‑of‑credit maturities within 12 months, and technical covenant non‑compliance requiring waivers; management cites substantial doubt about going concern .
  • Filing delays and control weaknesses: Q1 2024 10‑Q delinquent (Nasdaq notices); material weaknesses in ICFR and ineffective disclosure controls persisted through the latest filed quarter; later in 2024, ALPP flagged non‑reliance on prior statements for lease accounting issues .

Financial Results

Note: Q1 2024 results were not reported. The latest available quarter is Q3 2023. “Estimates” from S&P Global are unavailable for ALPP this quarter.

MetricQ2 2023Q3 2023Q1 2024
Revenue ($USD Millions)$28.0 $25.60 Not reported
Net Income ($USD Millions)$(4.6) $(40.96) Not reported
Diluted EPS ($)$(0.18) $(1.49) Not reported

Segment revenue breakdown (YoY context from last filed quarter):

Segment Revenue ($USD Millions)Q3 2022Q3 2023
A4 Construction Services - MSM$4.64 $3.86
A4 Manufacturing - QCA$4.01 $3.68
A4 Manufacturing - Alt Labs$2.71 $6.39
A4 Defense - TDI$3.10 $2.07
A4 Technologies - RCA$11.48 $8.00
A4 Technologies - Elecjet$0.10 $0.07
A4 Aerospace - Vayu$0.00 $0.00
All Other$1.45 $1.53
Total$27.49 $25.60

Balance sheet and cash flow KPIs:

KPIDec 31, 2022Sep 30, 2023
Cash and Cash Equivalents ($M)$2.67 $2.93
Inventory ($M)$25.26 $22.23
Total Notes Payable + Lines of Credit ($M)$22.11 $21.25
Operating Cash Flow YTD ($M)—$2.08 (9M23)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
TDI wind‑down non‑cash charges2024N/A$10M–$12M expected non‑cash impairments; ~$1M PPE impairment New disclosure
TDI wind‑down transition costs2024N/A~$0.5M transition costs New disclosure
Consolidated revenue/margin/EPS2024None issuedNone issuedNo formal guidance

Management also reiterated a restructuring focus: maintain RCA and QCA, invest in Vayu/Elecjet/IDT/GAC; divest construction businesses (MSM/JTD/Deluxe divested Jan 12, 2024); close Excel and wind down TDI .

Earnings Call Themes & Trends

(No Q1 2024 call; themes reflect the last call (Q2 2023) and the Q1‑period shareholder letter.)

TopicPrevious Mentions (Q2 2023 call)Current Period (Q1 2024 letter/filings)Trend
Portfolio restructuringMargin focus at RCA; manufacturing mix shift; Elecjet/Vayu opportunities Formal MIDC plan; divested MSM/JTD/Deluxe; close Excel; wind‑down TDI Accelerating portfolio pruning
AI/Tech initiativesIDT analytics; Elecjet solid‑state battery pipeline and pilots Continue investment in Elecjet, IDT; pilot lab; target microgrid/auto/marine/RV Continued focus; execution phase
Supply chain/creditHigher interest costs; variable‑rate debt pressure Going‑concern; near‑term LOC maturities; covenant waivers Elevated financing risk
UAV/AerospaceVayu $100M supply agreement; early orders Invest in Vayu; GAC pursuing BVLOS certification in UAE Strategic emphasis, regulatory progress
Regulatory/listing/filings—Q1 2024 10‑Q delinquency; Nasdaq panel process Filing timeliness is a key overhang
Controls/Restatement—Material weaknesses persist; later disclosed non‑reliance for 2022–2023 lease accounting Remediation required

Management Commentary

  • “As we proceed with our divestment plan for non‑performing subsidiaries, we expect our margins to increase in Q3 and Q4 2024. Finally, the filing of this quarterly report is the first step toward getting the Company back on track and current, and we expect subsequent filings to follow relatively quickly.” — Kent Wilson, CEO (8‑K) .
  • “Our commitment to change began with the termination of our prior auditing firm…The US business landscape is ever‑changing, and Alpine 4 has reached a decisive moment to pivot and embrace the future…Maintain, Invest, Divest, Close (MIDC).” — CEO letter .
  • “The plan for TDI is to gradually wind down operations… The Company intends to wind down the operations of TDI… expected to incur total non‑cash expenses of between $10 million and $12 million… other transition costs of approximately $500,000.” — CEO letter and subsequent events .

Q&A Highlights

  • No Q1 2024 earnings call or Q&A was held; prior call (Q2 2023) focused on segment mix, Elecjet/Vayu pipeline, and financing activities .

Estimates Context

  • S&P Global/Capital IQ consensus estimates for ALPP were unavailable via our feed this quarter; as a result, we cannot provide “vs. consensus” comparisons for Q1 2024. We attempted to retrieve “Primary EPS Consensus Mean” and “Revenue Consensus Mean,” but no SPGI mapping existed for ALPP, and Q1 2024 results were not filed [GetEstimates error; Q1 2024 delinquency: https://finance.yahoo.com/news/alpine-4-holdings-inc-announces-200000696.html].

Key Takeaways for Investors

  • Near‑term focus is on catching up filings and remediating control weaknesses; both are prerequisites for credibility and potential relisting momentum. Filing status and any restatement updates remain key catalysts/risks .
  • Liquidity risk is elevated: negative working capital, near‑term LOC maturities, and reliance on waivers; watch for refinancing actions, asset sales, and operating cash conversion at RCA/QCA to bridge 2024–2025 .
  • Restructuring should simplify the portfolio: divestitures and closures aim to concentrate capital on RCA/QCA (margin stability) and growth bets (Vayu, Elecjet, IDT, GAC); execution and cost control will determine if margins/cash flow improve as management asserts .
  • Non‑cash TDI wind‑down charges ($10–$12M) will weigh on 2024 GAAP results but are largely non‑cash; investors should focus on underlying gross margin and segment profitability excluding these items .
  • For trading, headline risk around filing timeliness, any further restatements, and liquidity steps (capital raises, debt amendments) could drive volatility; constructive updates on Elecjet/Vayu commercial traction or RCA product wins could provide upside offsets .

Additional data used:

  • Q3 2023 Form 10‑Q (filed 6/6/2024): financial statements, segment details, going‑concern and subsequent events .
  • 8‑K (6/6/2024) with results update and CEO quote .
  • Shareholder letter 8‑K (3/21/2024) outlining MIDC and strategic focus .
  • Q2 2023 earnings call transcript for trend context .
  • Nasdaq delinquency press release (5/28/2024) .
  • Non‑reliance 8‑K (11/19/2024) for later restatement context .