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EA

ECD Automotive Design, Inc. (ECDA)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 revenue was $6.42M, down 8% year over year but up sequentially versus Q4 2024, with gross margin improving to 27.5% as deferred revenue converted to sales; net loss per share improved to $(0.08) from $(0.09) YoY .
  • The company disclosed an SEC investigation relating to its 2024 restatement and auditor changes, a potential stock overhang and risk factor .
  • Liquidity remains tight (cash $0.68M; working capital deficit ~$5.5M); management continues to rely on customer deposits and new loans, including an April 2025 loan and a May exchange creating Series B-1 convertible preferred stock tied to note conversions .
  • Management reiterated the operational goal to reach cash-flow positive around 10 units/month; retail “store-within-a-store” is intended to drive faster cash conversion and lower marketing costs (Q4 call) .

What Went Well and What Went Wrong

  • What Went Well
    • Gross margin improved to 27.5% in Q1 2025 vs 21.8% in Q1 2024, supported by higher ASPs and conversion of deferred revenue; management highlighted order pricing “north of $500,000” as evidence of customization strength .
    • Sequential revenue improvement versus Q4 2024 (Q4 press release cited 12 completed vehicles that slipped into 1H25 due to year-end title timing), consistent with Q1 deferred revenue drawdown (–$1.31M) .
    • Retail strategy launched in West Palm Beach and Nantucket to enhance engagement and reduce mobile outreach spend; management: “our first retail location… has exceeded our expectations thus far” .
  • What Went Wrong
    • Liquidity strained: cash fell to $0.68M at 3/31/25 and working capital deficit was ~$5.5M; reliance on new loans and exchanges continued in April–May .
    • Elevated interest expense ($1.86M) from convertible notes and floor plan financing, pressuring GAAP profitability despite margin gains .
    • SEC investigation into restatement and auditor changes disclosed May 15, 2025, a governance and headline risk .

Financial Results

MetricQ1 2024Q4 2024Q1 2025
Revenue ($USD)$6,989,746 $5,300,000 $6,421,371
Net Income ($USD)$(2,859,862) $(3,300,000) $(2,750,317)
EPS (Basic & Diluted, $)$(0.09) $(0.11) $(0.08)
Gross Profit ($USD)$1,525,633 $300,000 $1,764,572
Gross Margin %21.8% n/a27.5%

Disaggregation of Revenue:

CategoryQ1 2024Q1 2025
Builds ($USD)$6,899,354 $6,407,899
Warranty & Other ($USD)$90,392 $13,472
Total ($USD)$6,989,746 $6,421,371

KPIs and Operating Drivers:

KPIQ1 2024Q1 2025
Deferred Revenue ($USD)$11,802,825 (12/31/24) $10,488,363 (3/31/25)
Customer Deposits ($USD)$8,130,324 (12/31/24) $7,721,542 (3/31/25)
Inventory ($USD)$11,181,806 (12/31/24) $10,439,696 (3/31/25)
Adjusted EBITDA ($USD)$(434,890) $(877,790)

Context on Q4-to-Q1 trajectory: Q4 2024 carried a non-cash $1.1M COGS write-down and 12 completed vehicles recognized in 1H25 due to title timing; Q1 2025 shows higher gross profit and lower deferred revenue consistent with revenue recognition .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Formal Financial GuidanceFY 2025None provided None provided Maintained
Operational Run-Rate Target (indicative)2025~10 units/month breakeven (from prior commentary) “Hit… in the next few months” (Q4 call outlook) Clarified timeline
Retail Location Throughput (indicative)Ongoing2 vehicles/month/location target (Q4 call) Ongoing; early performance “exceeded expectations” Maintained

Note: The company did not issue quantitative revenue/margin/OpEx guidance for Q1 or FY 2025 in filings or releases; management provided operational markers on the Q4 call .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3/Q4 2024)Current Period (Q1 2025)Trend
Retail Strategy & Community HubsAnnounced retail push; W. Palm Beach opened; Nantucket opening; aim to reduce outreach costs Strategy present across filings; no Q1 call transcript; retail cited as channel to convert inventory to cash Expanding footprint; execution ongoing
Tariffs/MacroCEO: classic vehicles not subject to new-auto tariffs; plans to offset margin impacts; no base price increase No new tariff update in Q1 filings; continued focus on margins and ASP Risk monitored; mitigation plan intact
Production Run-Rate/Cash FlowCFO: ~10 units/month breakeven; ~8.5 units/month currently; expects to reach breakeven “next few months” Deferred revenue decline aligns with deliveries; no explicit unit disclosure in Q1 10-Q Targeting higher throughput
Pricing/ASP & CustomizationOrders >$500k; average $300–$400k per vehicle Gross margin improved; builds gross margin 26.0% Pricing mix supportive
Governance/Restatements2024 restatements; BF Borgers shutdown; restatement costs SEC investigation disclosed May 2025 Elevated governance scrutiny

Management Commentary

  • “We have now [received] orders for autos north of $500,000… bolsters our position as the leading luxury U.S. manufacturer of fully customized… vehicles” (CEO, Q4 call) .
  • “Our first retail location… West Palm Beach… has exceeded our expectations thus far… designed to increase brand awareness and engage the local communities” (CEO, Q4 call) .
  • “The crossover point for cash flow positive… is about 10 units per month… we think that we hit that… in the next few months” (CFO, Q4 call) .
  • “Tariff… base vehicles are not subject… classic vehicles… we made a commitment that we weren’t going to increase our base contract prices… [we] adjusted upgrade pricing to offset” (CEO, Q4 call) .

Q&A Highlights

  • Throughput breakeven: ~10 units/month; management expects to reach in “next few months,” aided by retail openings and Q4→Q1 vehicle title timing .
  • Sales mix: Retail contributes ~20% of leads, enabling reduced spend on mobile outreach; digital now ~80% of leads vs 100% historically .
  • Tariffs: Classic vehicle status mitigates exposure; internal pricing controls aim to protect customers and margins without base price increases .

Estimates Context

  • FY 2025 Revenue consensus: $30.0M*; Q1 2025 quarterly consensus was unavailable in our pull (actual revenue was $6.42M) *.
  • FY 2025 Primary EPS consensus mean: −4.00*; quarterly EPS consensus for Q1 2025 was unavailable.
  • Implications: With Q1 gross margin improvement and continued loan/exchange activity to bridge liquidity, Street will watch for sustained unit throughput and retail conversion to validate the FY revenue path.

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Margin recovery matters: Q1 gross margin rebounded to 27.5% with builds gross margin at 26.0%, indicating pricing/mix and operational efficiency gains; sustaining this while reducing interest burden is critical .
  • Liquidity risk persists: Cash of $0.68M and a working capital deficit necessitate continued reliance on deposits and financing; the April loan and May exchange (Series B-1 pref) reduce near-term pressure but add dilution/complexity .
  • Retail execution is the near-term catalyst: Management claims retail locations exceeded expectations and target 2 sales per month per location; proof points (backlog conversion, cash generation) will drive sentiment .
  • Governance overhang: The SEC investigation linked to the 2024 restatement is a headline and valuation risk until resolved; monitor disclosures and timing .
  • Operating goalpost: Hitting ~10 units/month is key for operating cash flow; watch deferred revenue drawdown, inventory turns, and unit disclosures in upcoming quarters .
  • YoY softness vs sequential improvement: Q1 revenue down 8% YoY but up sequentially vs Q4, helped by title timing; sustaining ASP and conversion should support 2025 trajectory .
  • Estimate risk: With limited formal guidance and high interest expense, Street FY EPS (−4.00*) implies continued losses; upside hinges on unit volume, retail throughput, and financing costs moderation.*

Values retrieved from S&P Global.*