Executive Summary

Revenue accelerated to $3.33M, up 66% q/q and 112% y/y, with gross margin expanding to 33% from 26% in Q2; net loss narrowed to $0.64M from $1.40M in Q2 (-54% q/q) .
Backlog held steady at ~$8.89M (+$3K q/q) while net bookings eased 14% sequentially to $3.33M, suggesting near-term revenue conversion with moderation in new order intake .
Management emphasized operational improvements and cash discipline; non-GAAP net loss excluding stock-based comp and D&A was ~$22K in Q3, highlighting underlying breakeven trend .
No formal quantitative guidance; commentary points to converting record backlog and improving margins over subsequent quarters, with regulatory tailwinds in Canada/Michigan supporting demand narrative .
Wall Street consensus estimates via S&P Global were unavailable for CEAD; results versus estimates cannot be assessed (S&P Global data unavailable).

What Went Well and What Went Wrong

What Went Well

Revenue and margin inflection: Q3 revenue $3.33M (+66% q/q) and gross margin 33% (+7ppt q/q) on improved equipment margins and fixed-cost absorption .
Underlying cash breakeven: Excluding $574K stock-based comp and $48K D&A, Q3 net loss was ~$22K, demonstrating cash conservation at higher revenue levels .
Management confidence and strategic positioning: “Q3 2018 was…a gratifying validation…operational improvements…If and when Surna achieves sustained positive cash flow…a significant differentiating factor…” — CEO Chris Bechtel .

What Went Wrong

New orders slowed: Net bookings fell 14% q/q to $3.33M; sequential moderation after strong H1 indicates near-term demand variability .
Working capital and going concern: Working capital turned to a $76K deficit and management reiterated substantial doubt about going concern absent additional capital or materially higher revenues .
Elevated non-cash costs: Q3 stock-based compensation was $574K, diluting operating leverage and prolonging GAAP losses; SG&A driven by equity comp remains a headwind .

Financial Results

Metric	Q3 2017 (oldest)	Q1 2018	Q2 2018	Q3 2018 (newest)
Revenue ($USD)	$1,566,256	$2,054,728	$2,007,745	$3,324,621
Diluted EPS ($)	($0.01)	($0.01)	($0.01)	($0.00)
Gross Margin (%)	25%	19%	26%	33%
Operating Loss ($USD)	($1,234,369)	($1,905,090)	($1,417,257)	($643,365)
Net (Loss) ($USD)	($1,478,478)	($1,883,544)	($1,400,945)	($643,562)

KPI	Q1 2018 (oldest)	Q2 2018	Q3 2018 (newest)
Net Bookings ($USD)	$4,623,000	$3,867,000	$3,328,000
Recognized Revenue ($USD)	$2,055,000	$2,008,000	$3,325,000
Ending Backlog ($USD)	$7,024,000	$8,883,000	$8,886,000
Cash & Equivalents ($USD)	$880,996	$1,628,880	$1,416,882

Estimates vs Actual (S&P Global):

Metric	Q3 2018 Actual	Q3 2018 Consensus	Delta
Revenue ($USD)	$3,324,621	N/A (S&P Global unavailable)	N/A
EPS ($)	($0.00)	N/A (S&P Global unavailable)	N/A

Note: S&P Global consensus data for CEAD was unavailable; estimates tables reflect non-availability (S&P Global).

Segment breakdown: Company reports one operating segment (manufacture/sale of climate control systems); no segment disaggregation .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	2H 2018	None	Management “look[s] forward to growing recognized revenues over the next two quarters” as backlog converts; no numeric guidance	Maintained (no formal guidance)
Gross Margin	Near term	None	Focus on pricing discipline, supplier alternatives, and fixed-cost absorption; margin improved to 33% in Q3	Qualitative improvement

Earnings Call Themes & Trends

No Q3 2018 earnings call transcript was found in the document set; thematic tracking below draws from press releases and MD&A.

Topic	Previous Mentions (Q-2 and Q-1)	Current Period (Q3 2018)	Trend
Backlog/Bookings	Record backlog entering Q3 ($8.88M); strong H1 bookings ($8.58M) driven by CA/Canada	Backlog steady at $8.89M; bookings moderated to $3.33M (-14% q/q)	Stable backlog, softer bookings
Gross Margin Actions	Margin recovered to 26% in Q2; focus on pricing and supplier alternatives	Margin expanded to 33% (+7ppt q/q) on improved equipment margins and fixed absorption	Improving
Regulatory/Macro	DOJ/Cole Memo uncertainty offset by CA adult-use and Canada legalization; OK medical ballot; MI referendum in Nov	Canada adult-use effective Oct 2018; MI passed adult-use; UT/MO medical passed—company positioning to capture demand	Tailwinds developing
Cash/Capital	Need to raise capital in Q4’18/Q1’19 to support growth; cash $1.63M at Q2	Cash $1.42M; working capital deficit; continued going concern disclosure	Tight liquidity
Geography/Go-to-Market	Focus on larger projects; CA/Canada strong; MI sales presence established	Continued multi-state bookings with Canada, CA, MI key; 28 commercial-scale projects YTD	Broadening footprint

Management Commentary

“Q3 2018 was…a gratifying validation of the foundation…If and when Surna achieves sustained positive cash flow…we believe that proof point will be a significant differentiating factor…Surna is working toward being one of those companies.” — CEO Chris Bechtel .
“Going into Q3 2018 with our largest backlog in history, we look forward to growing recognized revenues over the next two quarters…” — CEO Chris Bechtel (Q2 release) .
“We are encouraged…increased net bookings…[and] remain focused on improvement in [gross margin] through…pricing…fixed cost absorption…and lower-cost supplier alternatives.” — CEO Chris Bechtel (Q1 release) .

Q&A Highlights

No Q3 2018 earnings call transcript was available; therefore, Q&A themes and guidance clarifications cannot be extracted from a call transcript in this document set.

Estimates Context

S&P Global Wall Street consensus estimates for CEAD (CEA Industries/Surna) were unavailable in the SPGI mapping, preventing comparisons of actual results versus consensus (S&P Global data unavailable).
In absence of consensus, investors should anchor on sequential/YoY trajectories and backlog conversion to frame near-term expectations .

Key Takeaways for Investors

Revenue and margin momentum: Q3 revenue $3.33M (+66% q/q) with gross margin up to 33% (+7ppt q/q); operating loss nearly halved sequentially — signals improving unit economics and scale benefits .
Bookings moderation amid steady backlog: Net bookings fell to $3.33M (-14% q/q) while backlog held at ~$8.89M, implying near-term revenue support but watch new order pace .
Underlying breakeven: Ex-stock comp/D&A, Q3 net loss was ~$22K, indicating operational breakeven at current activity levels; further margin gains or fixed-cost leverage could swing to cash generation .
Liquidity risk: Cash fell to $1.42M with a $76K working capital deficit and going concern warnings; capital raise or stronger cash conversion required to sustain growth .
Non-cash dilution: $574K in Q3 stock-based compensation inflates SG&A and GAAP losses; monitor equity issuance pace and its impact on per-share metrics .
Regulatory tailwinds: Canada adult-use legalization and MI adult-use approval expand addressable market; Surna’s presence in these regions positions it to benefit as licensing and builds progress .
Near-term setup: With improved margins and large backlog entering Q4, sequential revenue could remain healthy; absence of formal guidance and bookings softness argues for balanced positioning until trends confirm .

CEA Industries Inc. (CEAD)·Q3 2018 Earnings Summary