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Forward Industries, Inc. (FORD)·Q2 2024 Earnings Summary

Executive Summary

  • Revenues were $7.83M, down 19.6% year over year; gross margin improved to 20.5% from 19.8%, and diluted EPS was -$0.05. Management emphasized actions to return to profitability and noted discontinued retail division costs have largely concluded .
  • Sequentially, revenue rose vs Q1 ($7.15M to $7.83M), but operating loss widened to -$0.54M vs -$0.38M in Q1, reflecting higher G&A and mixed cost dynamics despite improved gross margin .
  • No formal guidance was provided; coverage on Wall Street consensus via S&P Global was unavailable for Q2 2024, limiting beat/miss analysis.
  • Corporate actions and listing compliance drive near-term stock catalysts: Nasdaq granted an extension to meet bid price and equity rules by July 9, 2024, and a 1-for-10 reverse split became effective June 18, 2024 .

What Went Well and What Went Wrong

What Went Well

  • Gross margin improved to 20.5% YoY; management highlighted ongoing measures to restore profitability: “The business continues to focus on proactively taking measures to return the group to profitability” .
  • Discontinued retail division costs “have largely come to a conclusion,” reducing a drag on consolidated results and aiding the profitability roadmap .
  • The design division (IPS) achieved record revenues and profitability in FY2023, providing a strategic backbone for growth in services and margin accretion .

What Went Wrong

  • Revenue declined 19.6% YoY to $7.83M, driven by softer volumes vs prior year levels; net loss was -$0.55M vs -$0.87M YoY (continued losses despite margin improvement) .
  • Operating loss widened YoY to -$0.54M from -$0.12M, and sequentially from -$0.38M, as G&A totaled $1.78M vs $1.57M YoY; continued cost discipline remains a priority .
  • Listing risk persisted until corporate actions: Nasdaq compliance extension granted (bid price and equity rules), and a reverse split was executed to support bid price remediation .

Financial Results

MetricQ2 2023Q1 2024Q2 2024
Revenue ($USD Millions)$9.74 $7.15 $7.83
Gross Profit ($USD Millions)$1.93 $1.64 $1.61
Gross Margin %19.8% 23.0% 20.5%
Operating Income (Loss) ($USD Millions)-$0.09 -$0.38 -$0.54
Net Income (Loss) ($USD Millions)-$0.87 -$0.35 -$0.55
Diluted EPS ($USD)-$0.09 -$0.04 -$0.05

Segment breakdown: Not disclosed in Q2 press materials; management refers to design (IPS, Kablooe) and distribution activities, with IPS record revenues noted for FY2023 .

Key KPIs (Balance Sheet)

MetricSep 30, 2023Dec 31, 2023Mar 31, 2024
Cash And Equivalents ($USD Millions)$3.18 $3.03 $2.26
Accounts Receivable, net ($USD Millions)$6.97 $6.53 $6.48
Inventories, net ($USD Millions)$0.33 $0.41 $0.31
Due to Forward China ($USD Millions)$8.25 $8.89 $8.69
Deferred Income ($USD Millions)$0.30 $0.25 $0.23

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueQ3 2024 / FY2024No formal guidance provided No formal guidance provided Maintained
Gross Margin %Q3 2024 / FY2024No formal guidance provided No formal guidance provided Maintained
OpExQ3 2024 / FY2024No formal guidance provided No formal guidance provided Maintained
EPSQ3 2024 / FY2024No formal guidance provided No formal guidance provided Maintained

Corporate actions relevant to outlook:

  • Nasdaq compliance extension to July 9, 2024 for bid price and stockholders’ equity; 1-for-10 reverse split effective June 18, 2024 to aid bid price compliance .

Earnings Call Themes & Trends

Note: No Q2 2024 earnings call transcript was available in the document corpus.

TopicPrevious Mentions (Q-2: FY2023 prelim; Q-1: Q1 FY2024)Current Period (Q2 FY2024)Trend
Profitability initiativesFY2023: “continuing operations were profitable…cash positive…on a path of substantive growth” . Q1: “effort to turnaround…continues with several initiatives now in place” .“Proactively taking measures to return the group to profitability” .Improving focus
Gross margin disciplineQ1: Gross margin 23.0% (+280 bps YoY) .Gross margin 20.5% (+70 bps YoY) .Mixed (improved YoY, down seq.)
Discontinued operations wind-downFY2023: discontinued retail operations; continuing ops profitable . Q1: Stability and turnaround efforts .“Costs from our discontinued retail division have largely come to a conclusion” .Improving
Nasdaq compliance and capital actionsNo prior mention in FY2023 prelim; Q1 2024 8-K included Nasdaq notice of non-compliance (bid price/equity) .Extension to July 9, 2024; reverse split announced to address bid price .Active remediation
Design division performance (IPS)FY2023: IPS record revenues and profitability .Continued emphasis on returning to profitability across divisions .Strategic anchor

Management Commentary

  • “The business continues to focus on proactively taking measures to return the group to profitability…we will need a prolonged sustained effort from all our divisions to fulfill our objective of robust growth and profitability.” — CEO Terry Wise .
  • “A relatively static quarter with a pleasing improvement in gross margin. Our effort to turnaround the business into profitability continues with several initiatives now in place.” — CEO Terry Wise (Q1 FY2024) .
  • “IPS…achieved historically high revenues and profitability…Having completed the turnaround…we will seek to grow our organic businesses significantly…pursue suitable acquisition/venture opportunities.” — CEO Terry Wise (FY2023 prelim) .

Q&A Highlights

  • No Q2 FY2024 earnings call transcript or Q&A was available across filings and press releases; therefore no call-based clarifications or tone shifts can be assessed for this quarter.

Estimates Context

  • We attempted to retrieve Wall Street consensus (S&P Global) for revenue and EPS; consensus data for FORD Q2 FY2024 was unavailable. As a result, beat/miss vs estimates cannot be determined this quarter.
MetricActual (Q2 2024)Consensus (S&P Global)Surprise
Revenue ($USD Millions)$7.83 N/AN/A
Diluted EPS ($USD)-$0.05 N/AN/A

Key Takeaways for Investors

  • Gross margin improved YoY to 20.5% despite revenue softness; continued cost focus is central to near-term profitability efforts .
  • Sequential revenue increased vs Q1, but operating loss widened; monitor G&A and execution in design/distribution to validate margin trajectory .
  • Discontinued retail operations costs largely concluded, removing a structural drag; this should simplify the path to profitability from continuing operations .
  • Listing remediation actions (Nasdaq extension and 1-for-10 reverse split) are key short-term catalysts affecting trading dynamics and liquidity near July 9 compliance deadline .
  • The design division (IPS) is an earnings lever with record FY2023 performance; strategic emphasis on services could support margin mix over time .
  • Lack of formal guidance and unavailable consensus complicate near-term estimate anchoring; focus on sequential revenue stability, gross margin progression, and OpEx control in upcoming quarters .
  • Balance sheet shows declining cash and persistent payables to Forward China; monitor working capital and financing costs as management navigates profitability and listing compliance .