Lendway, Inc. Announces Second Quarter 2024 Financial Results

Rhea-AI Summary

Lendway, Inc. (NASDAQ:LDWY) reported improved financial results for Q2 2024. Key highlights include:

- Net revenue of $16.8 million
- Gross profit of $4.0 million (23.7% of sales)
- Operating loss reduced to $0.1 million from $0.6 million in Q2 2023
- Adjusted EBITDA of $1.8 million compared to a loss of $0.5 million in Q2 2023
- Cash generated from operations increased to $3.5 million

The improvement is largely attributed to the acquisition of Bloomia, a leading US tulip producer. However, the company reported a net loss of $0.7 million ($0.42 per share) due to acquisition-related costs and increased interest expenses. Management expects seasonality in sales, with stronger performance in Q1 and Q2.

Positive

• Significant revenue increase to $16.8 million in Q2 2024
• Improved gross profit of $4.0 million (23.7% of sales)
• Reduced operating loss from $0.6 million to $0.1 million year-over-year
• Positive Adjusted EBITDA of $1.8 million compared to a loss in Q2 2023
• Increased cash generated from operations to $3.5 million
• Successful integration of Bloomia acquisition, contributing to revenue and profit growth

Negative

• Net loss of $0.7 million ($0.42 per share) in Q2 2024
• Increased net loss from continuing operations ($0.9 million vs $0.4 million in Q2 2023)
• Higher interest expenses due to Bloomia acquisition
• Expected losses in remaining quarters of 2024 due to seasonality and one-time costs
• Decreased cash and cash equivalents from $16.1 million to $1.7 million due to acquisition funding

Insights

Financial Analyst

Lendway's Q2 2024 results show a significant transformation following the Bloomia acquisition. While net revenue reached $16.8 million, the company still posted a net loss of $0.7 million. The gross profit margin of 23.7% is noteworthy, but it's important to monitor if this can be maintained.

The adjusted EBITDA of $1.8 million is a positive sign, especially compared to the loss in Q2 2023. However, investors should be cautious about the seasonality of the business, as management warns of potential losses in the coming quarters. The cash position has significantly decreased to $1.7 million, which could be a concern if additional capital is needed for growth initiatives.

Market Research Analyst

The acquisition of Bloomia has repositioned Lendway in the specialty agriculture sector, particularly in the cut flower market. This move aligns with growing consumer interest in fresh, locally-sourced products. However, the highly seasonal nature of the business presents both opportunities and challenges.

The strong performance in Q1 and Q2, driven by events like Valentine's Day and Easter, suggests potential for targeted marketing strategies. Yet, the company must navigate the slower seasons effectively. The management's focus on long-term growth and mention of "many opportunities" in the market indicates potential for expansion, but concrete plans and execution will be key to realizing this potential.

Agricultural Business Expert

Lendway's transition into the cut flower industry through Bloomia is a strategic move into a niche but growing market. The seasonality of the business, with strong Q1 and Q2 performance, is typical for the industry but requires careful management of resources and cash flow throughout the year.

The company's plan to invest in the second half of the year for better results next fiscal year is prudent, but execution is critical. The integration of Bloomia seems successful so far, with significant contribution to revenue and EBITDA. However, the high interest expenses and acquisition costs are impacting profitability. Future growth will depend on Lendway's ability to leverage Bloomia's market position while managing costs and potentially expanding into complementary product lines or markets.

MINNEAPOLIS, MN / ACCESSWIRE / August 19, 2024 / Lendway, Inc. (NASDAQ:LDWY) ("Lendway" or the "Company") today announced significant improvement in its financial results for the second quarter ended June 30, 2024 ("Q2").

Overview

Second quarter fiscal year 2024

• Net revenue was $16.8 million.

• Gross profit was $4.0 million or 23.7% of sales.

• Operating loss of $0.1 million compared to an operating loss of $0.6 million in Q2 2023.

• Net loss from continuing operations was $0.9 million compared to a loss of $0.4 million in Q2 2023.

• Net loss attributable to Lendway was $0.7 million, or a loss of $0.42 per basic and diluted share, compared to a net loss of $0.04 million, or a loss of $0.02 per basic and diluted share in Q2 2023.

• Adjusted EBITDA was $1.8 million compared to a loss of $0.5 million in Q2 2023.

• At June 30, 2024, cash and cash equivalents and restricted cash were $1.7 million and working capital was $6.1 million.

• Cash generated from operations was $3.5 million compared to a cash generation of $0.8 million in Q2 2023.

First half fiscal year 2024

• Net revenue was $24.8 million.

• Gross profit was $5.9 million or 23.7% of sales.

• Operating loss of $1.6 million compared to $1.2 million in Q2 2023.

• Net loss from continuing operations was $2.2 million compared to a loss of $1.0 million in the first half of 2023.

• Net loss attributable to Lendway was $1.8 million, or a loss of $1.01 per basic and diluted share, compared to net income of $1.6 million, or $0.90 per basic and $0.89 per diluted share in the first half of 2023.

• Adjusted EBITDA was $3.5 million compared to a loss of $1.2 million in Q2 2023

• Cash generated from operations was $5.0 million compared to a cash use of $3.0 million in first half of 2023.

Lendway's Co-Chief Executive Officer, Mark Jundt commented, "The business had a strong second quarter due to our acquisition of Bloomia. We are very pleased with the revenue, margin and adjusted EBITDA produced in the quarter and the first half of the year. Due to the seasonality of the business, the second half of the year will be a time of investment that we are confident will result in even better results next fiscal year. There are many opportunities for growth in the market which makes it an exciting time to be in this business." Lendway's Co-Chief Executive Officer, Dan Philp, further commented, "Lendway invested in Bloomia as it was an excellent fit with our strategy to create long-term shareholder value through investments in high growth potential ag companies. Bloomia's highly talented and motivated team are proving why the Company is the industry-leader in the US with so much growth potential."

Q2 2024 Results

Revenue

Revenue was $16.8 million in Q2 2024, with no revenue from continuing operations in Q2 2023. All revenue was from Bloomia, which we acquired in February 2024. For Bloomia, the first and second calendar quarters are normally the strongest sales quarters, with the first calendar quarter benefiting from Valentine's Day, Easter season and the start of the Spring season.

Revenue for the first half of the year was $24.8 million compared to no revenue in fiscal year 2023. Due to the seasonality of Bloomia business, revenue is expected to decline in the second half of the year.

Gross profit

Gross profit in Q2 2024 was $4.0 million or 23.7% of sales with no comparable measure in the prior period. Excluding the non-cash inventory write-up adjustment, gross profit was 24.7% of sales. We anticipate seasonality in sales, with those sales and related gross profit expected to be relatively stronger in the first and second quarters of the year.

Gross profit in the first half of 2024 was $5.9 million or 23.7% of sales with no comparable measure in the prior period. Excluding the non-cash inventory write-up adjustment, gross profit was 30.0% of sales. We anticipate seasonality in sales, with those sales and related gross profit expected to be relatively stronger in the first and second quarters of the year.

Operating income (loss)

The Company had an operating loss of $0.1 million in the three months ended June 30, 2024, compared to an operating loss of $0.6 million in Q2 2023. The improvement relates to the seasonal operating profit associated with the acquisition of Bloomia partially offset by $1.0 million in interest expense and $0.7 million of one-time acquisition and integration costs related to the acquisition itself.

Operating loss in the first half of 2024 was $1.6 million compared to $1.2 million in Q2 2023. The operating loss includes $2.2 million of one-time acquisition and integration costs partially offset by the seasonal operating income of Bloomia, which the Company acquired in February 2024.

Net loss from continuing operations

Net loss from continuing operations was $0.9 million in the three months ended June 30, 2024 compared to a loss of $0.4 million in the three months ended June 30, 2023. The increase in the loss was primarily due to the increase in interest expense related to the acquisition of Bloomia, partially offset by the improvement in operating loss.

In the six months ended June 30, 2024 net loss from continuing operations was $2.2 million compared to a loss of $1.0 million in the six months ended June 30, 2023. The increase in the loss was primarily due to the increase in interest expense and acquisition costs related to the acquisition of Bloomia, partially offset by the seasonal operating income of Bloomia.

Net loss attributable to Lendway

Net loss attributable to Lendway for Q2 2024 was $0.7 million, or a loss of $0.42 per basic and diluted share, compared to a net loss of $0.04 million, or a loss of $0.02 per basic and diluted share, in Q2 2023. The net loss includes $0.7 million of one-time acquisition and integration costs related to the acquisition itself.

Net loss attributable to Lendway for the first half of 2024 was $1.8 million, or a loss of $1.01 per basic and diluted share, compared to a net income of $1.6 million, or a $0.90 per basic and $0.89 per diluted share, in the first half of 2023. The net loss in 2024 includes $2.2 million of one-time acquisition and integration costs, partially offset by the income from the Bloomia acquisition. In the first half of 2023, the Company had income from its discontinued business, which it sold in August 2023.

As discussed above, we anticipate seasonality in sales - with those sales and related gross profit expected to be relatively stronger in the first and second quarters of the year - resulting in expected losses in the remaining quarters of 2024 and a loss for the full year because of one-time acquisition costs and non-cash amortization expense.

Adjusted EBITDA

In Q2 2024, adjusted EBITDA, which excludes one-time acquisition and integration costs as well as other one-time charges, was $1.8 million, compared to a loss of $0.5 million in Q2 2023. The increase is a result of the Bloomia acquisition, which produces its strongest profit in the spring.

In the first half of 2024, Adjusted EBITDA was $3.5 million compared to a loss of $1.2 million.

Bloomia Adjusted EBITDA

Bloomia has earned $4.7 million of Adjusted EBITDA since acquisition. As discussed above, the Bloomia business has its strongest sales and earnings in the first two quarters of the year.

Balance Sheet

As of June 30, 2024, cash and cash equivalents totaled $1.7 million, compared to $16.1 million as of December 31, 2023. The decrease being attributed to Lendway funding the purchase of Bloomia with $9.2 million of cash. Working capital (current assets less current liabilities) was $6.1 million at June 30, 2024, compared to $15.5 million at December 31, 2023.

About Lendway, Inc.

Lendway, Inc (NASDAQ:LDWY) is a specialty ag company focused on making, and managing, its ag investments in the U.S. and internationally. The Company is the majority owner of Bloomia, one of the largest producers of fresh cut tulips in the United States. For additional information, contact (800) 874-4648, or visit our website at www.lendway.com. Investor inquiries can be submitted to info@lendway.com.

Cautionary Statement Regarding Forward-Looking Statements

Statements in this press release that are not statements of historical or current facts are considered forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, as amended. The words "anticipate," "continue," "ensure," "expect," "plan," "remain," "seek," "will" and similar expressions identify forward-looking statements. Readers are cautioned not to place undue reliance on these or any forward-looking statements, which speak only as of the date of this press release. Statements made in this press release regarding, for instance, the short- and long-term benefits of the Bloomia acquisition, potential growth, allocations of capital resources among our businesses, and timing of future financial reporting, are forward-looking statements. These forward-looking statements are based on current information, which we have assessed and which by its nature is dynamic and subject to rapid and even abrupt changes. Factors that could cause our estimates and assumptions as to future performance, and our actual results, to differ materially include the following: (1) our ability to integrate and continue to successfully operate the newly acquired Bloomia business, (2) our ability to compete, (3) concentration of Bloomia's historical revenue among a small number of customers, (4) changes in interest rates, (5) ability to comply with the requirements of the Credit Agreement, (6) market conditions that may restrict or delay appropriate or desirable opportunities, (7) our ability to develop and maintain necessary processes and controls relating to our businesses (8) reliance on one or a small number of employees in each of our businesses, (9) potential adverse classifications of our Company if we are unsuccessful in executing our business plans, (10) other economic, business, market, financial, competitive and/or regulatory factors affecting the Company's businesses generally; (11) our ability to attract and retain highly qualified managerial, operational and sales personnel; and (12) the availability of additional capital on desirable terms, if at all. Forward-looking statements involve known and unknown risks, uncertainties and other factors, including those set forth in our Annual Report on Form 10-K for the year ended December 31, 2023 and additional risks, identified in this and subsequent Quarterly Reports on Form 10-Q and our Current Reports on Form 8-K filed with the SEC. Such forward-looking statements should be read in conjunction with Lendway's filings with the SEC. Lendway assumes no responsibility to update the forward-looking statements contained in this press release or the reasons why actual results would differ from those anticipated in any such forward-looking statement, other than as required by law.

Results of Operations

Lendway, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(Unaudited)

		Three Months Ended								Six Months Ended
		June 30								June 30
		2024				2023				2024				2023
Revenue, net		$	16,780,000			$	-			$	24,813,000			$	-
Cost of goods sold			12,803,000				-				18,942,000				-
Gross profit			3,977,000				-				5,871,000				-
Sales, general and administrative expenses			4,095,000				557,000				7,483,000				1,185,000
Operating income (loss)			(118,000	)			(557,000	)			(1,612,000	)			(1,185,000	)
Foreign exchange difference, net			9,000				-				(36,000	)			-
Interest expense (income), net			964,000				(135,000	)			1,189,000				(238,000	)
Other expenses, net			(9,000	)			-				-				-
Loss from continuing operations before income taxes			(1,082,000	)			(422,000	)			(2,765,000	)			(947,000	)
Income tax (benefit) expense			(201,000	)			4,000				(548,000	)			7,000
Net loss from continuing operations			(881,000	)			(426,000	)			(2,217,000	)			(954,000	)
Income from discontinued operations, net of tax			64,000				390,000				136,000				2,566,000
Net (loss) income including noncontrolling interest			(817,000	)			(36,000	)			(2,081,000	)			1,612,000
Less: Net (loss) income attributable to noncontrolling interest			(72,000	)			-				(295,000	)			-
Net (loss) income attributable to Lendway, Inc.			(745,000	)			(36,000	)			(1,786,000	)			1,612,000
Net (loss) income including noncontrolling interest			(817,000	)			(36,000	)			(2,081,000	)			1,612,000
Other comprehensive income (foreign currency translation)			43,000				-				46,000				-
Comprehensive (loss) income including noncontrolling interest			(702,000	)			(36,000	)			(1,740,000	)			1,612,000
Less: Comprehensive (loss) income attributable to noncontrolling interest			8,000				-				9,000				-
Comprehensive (loss) income attributable to Lendway, Inc.		$	(710,000	)		$	(36,000	)		$	(1,749,000	)		$	1,612,000
Net (loss) income per basic share attributable to Lendway, Inc.:
Continuing operations		$	(0.46	)		$	(0.24	)		$	(1.09	)		$	(0.53	)
Discontinued operations			0.04				0.22				0.08				1.43
Basic earnings per share		$	(0.42	)		$	(0.02	)		$	(1.01	)		$	0.90
Net (loss) income per diluted share attributable to Lendway, Inc.:
Continuing operations		$	(0.46	)		$	(0.24	)		$	(1.09	)		$	(0.53	)
Discontinued operations			0.04				0.22				0.08				1.42
Diluted earnings per share		$	(0.42	)		$	(0.02	)		$	(1.01	)		$	0.89
Shares used in calculation of net (loss) income per share:
Basic			1,770,000				1,798,000				1,770,000				1,798,000
Diluted			1,770,000				1,798,000				1,770,000				1,802,000

See accompanying notes to the condensed consolidated financial statements.

SELECTED BALANCE SHEET DATA

		(Unaudited)
		June 30,				December 31,
		2024				2023
Cash and cash equivalents		$	1,721,000			$	16,077,000
Working capital			6,065,000				15,525,000
Total assets			95,898,000				16,673,000
Total debt			31,416,000				-
Total liabilities			79,397,000				1,141,000
Stockholders' equity			16,501,000				15,532,000

Working capital represents current assets less current liabilities.

Non-GAAP Reconciliation

This press release includes adjusted EBITDA, which is a non-GAAP financial measure. Non-GAAP financial measures, which are not calculated or presented in accordance with U.S. generally accepted accounting principles ("GAAP"), have been provided as information supplemental and in addition to the financial measures presented in accordance with GAAP. Such non-GAAP financial measures are not substitutes for, or as an alternative to, and should be considered in conjunction with, respective GAAP financial measures. The non-GAAP financial measures presented may differ from similarly named measures used by other companies.

Included below are reconciliations of EBITDA and Adjusted EBITDA to net loss from continuing operations, the most directly comparable GAAP measure. We have included these non-GAAP performance measures as a comparable measure to eliminate the effects of non-recurring transactions that occurred during the three and six months ended June 30, 2024. We believe Adjusted EBITDA provides meaningful supplemental information about our operating performance as this measure excludes amounts from net loss from discontinued operations that we do not consider part of our core operating results when assessing our performance. Items excluded from Adjusted EBITDA consist of acquisition-related costs and other costs such as the cost of inventory that was stepped up to fair value as a result of the purchase accounting related to our acquisition of a majority interest in Bloomia. Adjusted EBITDA does not reflect our cash expenditures, the cash requirements for the replacement of depreciated and amortized assets, or changes in or cash requirements for our working capital needs.

The following table reconciles net loss from continuing operations and adjusted EBITDA for the three months ended June 30, 2024 and 2023:

		Three Months Ended								Six Months Ended
		June 30								June 30
		2024				2023				2024				2023
Net loss from continuing operations		$	(881,000	)		$	(426,000	)		$	(2,217,000	)		$	(954,000	)
Interest (income) expense, net			964,000				(135,000	)			1,189,000				(238,000	)
Provision for income taxes			(201,000	)			4,000				(548,000	)			7,000
Depreciation and amortization			808,000				12,000				1,108,000				26,000
EBITDA			690,000				(545,000	)			(468,000	)			(1,159,000	)
Acquisition and integration related costs			652,000				-				2,194,000				-
Step-up inventory written off			162,000				-				1,522,000				-
One-time waste costs			270,000				-				270,000				-
Non-operating (income) loss			-				-				(36,000	)			-
Adjusted EBITDA		$	1,774,000			$	(545,000	)		$	3,482,000			$	(1,159,000	)

Reconciliation of Bloomia Adjusted EBITDA to total Company Adjusted EBITDA. Manangement excludes Lendway corporate overhead when evaluatings its investment in Bloomia.

		Acquisition to				Six Months Ended
		June 30, 2024				June 30, 2024
		Bloomia				Lendway Overhead				Total
Loss from continuing operations before income taxes		$	(1,650,000	)		$	(1,115,000	)		$	(2,765,000	)
Depreciation			1,108,000				-				1,108,000
Interest exp (income)			1,315,000				(126,000	)			1,189,000
EBITDA			773,000				(1,241,000	)			(468,000	)
Non-operating (income) loss			(36,000	)			-				(36,000	)
Acquisition and integration related costs			2,194,000				-				2,194,000
Step-up inventory write-off			1,522,000				-				1,522,000
One-time waste costs			270,000				-				270,000
Adjusted EBITDA		$	4,723,000			$	(1,241,000	)		$	3,482,000

We believe these non-GAAP financial measures will be useful to permit investors to compare results with prior periods that did not include the one-time events and the resulting accounting charges. Management has used EBITDA and Adjusted EBITDA (a) to evaluate our historical and prospective financial performance and trends as well as our performance relative to competitors and peers; (b) to measure operational profitability on a consistent basis; (c) in presentations to the members of our Board of Directors; and (d) to evaluate compliance with covenants and restricted activities under the terms of our Credit Agreement.

Contact:

Lendway, Inc.
Biz McShane, CFO
(763) 392-6200

SOURCE: Lendway, Inc.

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FAQ

What was Lendway's (LDWY) revenue for Q2 2024?

Lendway (LDWY) reported revenue of $16.8 million for Q2 2024.

How did Lendway's (LDWY) Adjusted EBITDA change in Q2 2024 compared to Q2 2023?

Lendway's (LDWY) Adjusted EBITDA improved to $1.8 million in Q2 2024, compared to a loss of $0.5 million in Q2 2023.

What was the main driver of Lendway's (LDWY) financial improvement in Q2 2024?

The main driver of Lendway's (LDWY) financial improvement in Q2 2024 was the acquisition of Bloomia, a leading US tulip producer.

Did Lendway (LDWY) report a profit or loss for Q2 2024?

Lendway (LDWY) reported a net loss of $0.7 million, or $0.42 per share, for Q2 2024.

How much cash did Lendway (LDWY) generate from operations in Q2 2024?

Lendway (LDWY) generated $3.5 million in cash from operations in Q2 2024.