10-Q: Lendway, Inc. Reports Q1 2025 Results, Revenue Jumps Following Bloomia Acquisition

Lendway, Inc. reports increased revenue for Q1 2025, driven by the acquisition of Bloomia, a fresh-cut tulip producer.

Summary

• Lendway, Inc. reported its Q1 2025 financial results, showing a significant increase in revenue due to the acquisition of Bloomia B.V.
• Revenue for the quarter was $12.443 million, compared to $8.033 million in Q1 2024.
• The company reported net income attributable to Lendway, Inc. of $449,000, a significant improvement from the net loss of $1.163 million in the same period last year.
• Gross profit increased to $3.889 million, representing 31.3% of revenue, compared to $1.744 million or 21.7% in the prior year.
• Sales, general, and administrative expenses decreased to $2.457 million from $3.388 million year-over-year, primarily due to acquisition-related costs in the prior year.
• Interest expense increased substantially to $970,000 due to debt incurred for the Bloomia acquisition, compared to $225,000 in the prior year.
• The company changed its fiscal year-end from December 31 to June 30 and will file a transition report on Form 10-K for the six-month period ending June 30, 2025.
• EBITDA for the quarter was $2.578 million, compared to a negative EBITDA of $1.308 million in the same period last year.

Sentiment

Score: 7

Explanation: The report shows improved financial performance due to the Bloomia acquisition, but increased debt and a prior covenant breach temper the positive outlook.

Positives

• Revenue increased significantly due to the Bloomia acquisition.
• The company achieved net income attributable to Lendway, Inc. compared to a net loss in the same period last year.
• Gross profit margin improved year-over-year.
• Sales, general, and administrative expenses decreased due to lower acquisition-related costs.
• EBITDA improved significantly compared to the same period last year.

Negatives

• Interest expense increased substantially due to debt incurred for the Bloomia acquisition.
• Working capital decreased from $11.026 million at December 31, 2024, to $6.274 million at March 31, 2025.

Risks

• The company's ability to integrate and successfully operate the Bloomia business is a risk.
• The company's reliance on a small number of customers for Bloomia's revenue is a risk.
• Changes in interest rates could increase the company's interest expense.
• The company's ability to comply with the requirements of the Credit Agreement is a risk.
• The company expects to be in compliance with financial covenants for at least the next twelve months.
• The company was in breach of its maximum senior cash flow leverage ratio as of March 31, 2025, but the lender waived the breach.

Future Outlook

Management expects revenue in the quarter ending June 30, 2025, to be higher when compared to the same period in 2024 due to the Easter holiday falling in the second calendar quarter of 2025.

Industry Context

The company operates in the specialty agricultural sector, specifically focusing on the production and sale of fresh-cut tulips. The acquisition of Bloomia positions Lendway as a significant player in the U.S. tulip market, competing with both domestic and international producers.

Comparison to Industry Standards

• It is difficult to compare Lendway directly to industry standards due to its unique focus on tulip production and its recent acquisition of Bloomia.
• However, the company's gross margin of 31.3% is a key metric to watch, as it reflects the efficiency of its operations and its ability to compete on price and quality.
• Comparable companies in the broader agricultural sector, such as Scotts Miracle-Gro or large greenhouse operators, may have different financial profiles due to their diversified product lines and business models.

Related Party Transactions

• The Company entered into an unsecured Delayed Draw Term Note with Air T Inc., which beneficially owns greater than 10% of our outstanding Common Stock and is a member of a group of stockholders that collectively owns approximately 40% of our outstanding common stock.
• Amounts outstanding under the Note bear interest at a fixed rate of 8.0%, which may be increased by 3.0% upon certain events of default, and the interest accrued and deferred until the maturity date.
• Additionally, our current director and Co-Chief Executive Officer, Mark R. Jundt, serves as General Counsel and Corporate Secretary of Air T, current director and Co-Chief Executive Officer, Daniel C. Philp, serves as Senior Vice President of Corporate development at Air T, and current director Nicholas J. Swenson serves as President and Chief Executive Officer of Air T and is himself a member of the stockholder group.
• The entry into the Note was approved in advance by the Audit Committee of our Board of Directors in accordance with our Related Person Transaction Approval Policy and by a vote of solely independent directors who have no relationship with Air T.

Stakeholder Impact

• Shareholders: The improved financial performance is generally positive for shareholders, but the increased debt and potential dilution from future equity offerings are concerns.
• Employees: The acquisition of Bloomia and the company's growth plans could create new opportunities for employees.
• Customers: Bloomia's focus on premium tulip stems and longer shelf life could benefit customers.
• Creditors: The company's ability to comply with its debt covenants is important for creditors.

Key Dates

Keywords

Lendway, Bloomia, acquisition, tulips, revenue, EBITDA, financial results, Q1 2025