Executive Summary

Q2 2024 revenue was $15,501,359, up approximately 4% sequentially vs. Q1 2024 ($14,913,497), but down year-over-year vs. Q2 2023 ($17,362,093) . Gross profit rose 14.2% YoY to $6.7M, reflecting improved cost efficiencies despite lower sales .
Loss from operations was $2,544,443 in Q2 2024 (improved QoQ vs. $3,109,631 in Q1 2024; worse YoY vs. $445,270 in Q2 2023) as professional fees spiked to $1,847,073 vs. $485,901 in Q2 2023 .
Management eliminated $4.2M of debt via the sale of ICU Eyewear and is advancing a division sale of 1847 Cabinets Inc. (anticipated close by mid-September 2024) and a definitive agreement to acquire a millwork/cabinetry/doors manufacturer ($28.6M 2023 revenue) .
No formal financial guidance or Wall Street consensus (S&P Global) was available. Near-term stock catalysts center on asset sales and the acquisition pipeline execution rather than earnings outperformance .

What Went Well and What Went Wrong

What Went Well

Gross profit increased 14.2% YoY in Q2 2024 to $6.7M; company highlighted operational optimization and cost efficiencies as drivers .
Balance sheet actions included elimination of $4.2M of debt tied to the sale of ICU Eyewear; management emphasized a private equity model of acquiring, improving, and strategically divesting assets .
Sequential revenue growth of ~4% vs. Q1 2024 amid active pipeline: progressing toward a definitive agreement to acquire a manufacturer with $28.6M 2023 revenue and substantial cash flow; targeted without equity funding .

Management quotes:

“In Q2 2024, we achieved approximately 4% sequential revenue growth and a 14.2% year-over-year increase in gross profit… we recently eliminated $4.2 million of debt through the sale of ICU Eyewear…” — CEO Ellery W. Roberts .
“We believe we have a robust acquisition pipeline… finalize a definitive agreement to acquire a leading manufacturer… $28.6 million in revenue… without the need for equity-based funding at this time.” — CEO Ellery W. Roberts .

What Went Wrong

Total revenue declined YoY to $15.5M (from $17.4M), with retail/eyewear (-31.5%), construction (-1.6%), and automotive (-19.1%) all lower vs. Q2 2023 .
Loss from continuing operations widened YoY to $4,906,812 (from $3,361,797) driven by higher amortization of debt discounts (+$2,145,775), loss on extinguishment of debt (+$778,875), and change in fair value of derivative liabilities (+$1,290,563) .
Professional fees surged to $1,847,073 vs. $485,901 in Q2 2023, pressuring operating results despite cost of revenues improvements .

Financial Results

Metric	Q2 2023	Q1 2024	Q2 2024
Revenue ($USD)	$17,362,093	$14,913,497	$15,501,359
Cost of Revenues ($USD)	$11,456,303	$9,325,561	$8,757,513
Gross Profit ($USD)	$5,905,790 (calc)	$5,587,936 (calc)	$6,743,846 (calc)
Gross Profit Margin (%)	34.0% (calc)	37.5% (calc)	43.5% (calc)
Total Operating Expenses ($USD)	$17,807,363	$18,023,128	$18,045,802
Loss from Operations ($USD)	$(445,270)	$(3,109,631)	$(2,544,443)
Net Loss from Continuing Ops ($USD)	$(3,361,797)	$(11,156,579)	$(4,906,812)
EPS (Diluted)	N/A	N/A	N/A

Notes:

Gross profit margin computed as gross profit divided by revenue; figures derived from reported revenue and cost of revenues .
EPS not disclosed in press releases and S&P Global consensus unavailable for EFSH.

Segment revenue and cost detail; computed gross profit and margin for visibility:

Segment	Q2 2023 Revenue	Q2 2023 Cost	Q2 2023 Gross Profit	Q2 2023 Gross Margin	Q1 2024 Revenue	Q1 2024 Cost	Q1 2024 Gross Profit	Q1 2024 Gross Margin	Q2 2024 Revenue	Q2 2024 Cost	Q2 2024 Gross Profit	Q2 2024 Gross Margin
Retail & Eyewear	$4,494,061	$3,430,540	$1,063,521 (calc)	23.7% (calc)	$3,896,167	$2,998,933	$897,234 (calc)	23.0% (calc)	$3,076,901	$1,421,597	$1,655,304 (calc)	53.8% (calc)
Construction	$11,503,895	$7,200,651	$4,303,244 (calc)	37.4% (calc)	$9,238,969	$5,158,266	$4,080,703 (calc)	44.2% (calc)	$11,321,371	$6,611,425	$4,709,946 (calc)	41.6% (calc)
Automotive Supplies	$1,364,137	$825,112	$539,025 (calc)	39.5% (calc)	$1,778,361	$1,168,362	$609,999 (calc)	34.3% (calc)	$1,103,087	$724,491	$378,596 (calc)	34.3% (calc)

KPIs and Operating Detail:

KPI	Q2 2023	Q1 2024	Q2 2024
General & Administrative ($USD)	$2,350,155	$2,132,600	$2,395,880
Professional Fees ($USD)	$485,901	$3,025,149	$1,847,073
Revenue QoQ Growth (%)	—	—	3.9% (calc from Q1→Q2)
Debt Reduction ($USD)	—	—	$4,200,000 (ICU sale)

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue/EPS	2024	None provided	None provided	Maintained (no formal guidance)
Divestiture of 1847 Cabinets (division)	Q3 2024	LOI to sell assets for up to $27.6M; anticipated closing within ~90 days (from mid-May)	Anticipated closing by mid-September 2024	Increased specificity; timeline defined
Acquisition: Millwork/Cabinetry/Doors Manufacturer	2024	Non-binding LOI; $28.6M 2023 revenue; purchase price ~$16.75M (~3.2x 2023 EBITDA)	Working to finalize definitive agreement; substantial cash flow; aim to avoid equity funding	Progressing from LOI to definitive agreement

Earnings Call Themes & Trends

No Q2 2024 earnings call transcript was available; themes below reflect management commentary across press releases.

Topic	Previous Mentions (Q4 2023)	Previous Mentions (Q1 2024)	Current Period (Q2 2024)	Trend
Acquisition pipeline	LOI to acquire millwork/cabinetry/doors manufacturer; $28.6M 2023 revenue; ~$16.75M (~3.2x EBITDA)	Maintained focus on accretive acquisitions with minimal dilution	Working to finalize definitive agreement; avoid equity funding	Advancing toward execution
Divestiture/Spin-off strategy	Engaged Spartan Capital to pursue spin-off/strategic transaction for 1847 Cabinets Inc.	LOI to sell 1847 Cabinets assets for up to $27.6M; close within 90 days	Anticipated division sale closing by mid-September 2024	Executing planned divestiture
Supply chain actions	ICU Eyewear diversified manufacturing; Wolo expanded supply chain into India	ICU Eyewear diversified manufacturing, added 300 locations; automotive segment growth aided by improved supply chain	Continued focus on cost efficiencies and operational optimization	Ongoing improvements
Debt management/financing	Refinanced/upsized $15M revolving credit facility for ICU; note on going concern in audited 10-K	Restructured promissory notes to non-dilutive debt instruments	Eliminated $4.2M debt via ICU sale	Continued deleveraging actions
Margin/profitability	FY23 gross margin 34.3%; Q4 2023 gross margin 18.2%	Gross profit +13.3% YoY in Q1; cost control in construction segment	Gross profit +14.2% YoY; gross margin improved	Improving margins despite revenue mix
Regulatory/legal	Auditors issued going concern in FY23 10-K	—	—	Persistent risk factor

Management Commentary

“After we acquired ICU Eyewear, we were able to clean up the books, reinforce the infrastructure, and enhance the value of assets before strategically selling it… demonstrating our successful private equity model.” — CEO Ellery W. Roberts .
“We are working to finalize a definitive agreement to acquire a leading manufacturer of millwork, cabinetry, and doors… we believe we can successfully complete this transaction without the need for equity-based funding at this time.” — CEO Ellery W. Roberts .
“We executed a non-binding LOI to sell all of the assets of 1847 Cabinets Inc.… proposed enterprise value of $27.6 million… proceeds will be utilized to repay senior secured debt… and potentially initiate a share repurchase program.” — CEO Ellery W. Roberts (Q1 press release) .

Q&A Highlights

No Q2 2024 earnings call transcript was available. Key clarifications were provided via press release:

Asset sale timing: division of 1847 Cabinets targeted to close by mid-September 2024 .
Acquisition financing posture: target to avoid equity-based funding for the millwork/cabinetry/doors transaction .
Balance sheet: $4.2M debt eliminated via ICU sale .

Estimates Context

Wall Street consensus (S&P Global) for Q2 2024 was unavailable for EFSH due to missing CIQ mapping; therefore, no revenue or EPS comparison to consensus can be provided [GetEstimates error].
Without formal guidance or available consensus, any model updates likely focus on: higher-than-expected professional fees, improved gross margin QoQ/YoY, sequential revenue growth, and the impact/timing of asset sale proceeds on leverage and interest/other expense trajectory .

Key Takeaways for Investors

Sequential revenue growth (+3.9% QoQ) alongside improved gross margin underscores operational progress even as YoY revenues declined; watch revenue mix and cost discipline into Q3/Q4 .
Elevated professional fees materially pressured operating results; normalization could be a near-term earnings lever if transaction-related costs subside .
Balance sheet actions are central to the equity story: $4.2M debt elimination and anticipated division sale by mid-September 2024 are potential catalysts for deleveraging and strategic capital allocation .
Acquisition pipeline execution — finalizing the millwork/cabinetry/doors deal without equity — is a key narrative driver; closing terms and post-close cash flow will be critical .
Segment dynamics: construction and retail/eyewear margins improved materially in Q2; sustaining these levels while stabilizing automotive volumes is important for consolidated profitability .
Lack of formal guidance and unavailable Street consensus increases uncertainty; investors should track upcoming filings/press releases for updates on transactions and operating cost trends .
Persisting going concern disclosure in FY23 highlights the importance of successful execution of asset sales and refinancing to de-risk the balance sheet .

1847 Holdings LLC (EFSH)·Q2 2024 Earnings Summary