Greetings and welcome to the 1847 Holdings, LLC, third quarter 2025 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Natalia Ruderman from Crescendo. Thank you. You may begin.
Thank you. Good morning, everyone, and welcome to 1847 Holdings, third quarter 2025 business update conference call. On the call with us this morning are Ellery Roberts, Chairman and Chief Executive Officer, and Bernice Howard, Chief Financial Officer. The company issued a press release this morning containing its 2025 third quarter financial results, which is also posted on the company's website. If you have any questions after the call or would like any additional information about the company, please contact Wyshenda Communications at 212-671-1020. Before we begin, I'd like to remind listeners that this conference call contains forward-looking statements within the meaning of the Prime Securities Litigation Reform Act of 1995, as amended, that are intended to be covered by the safe harbor created thereby. Forward-looking statements are subject to risks and uncertainties that could cause actual results, performance, or achievements to differ materially from any future results, performance, or achievements expressed or implied by such forward-looking statements. Statements preceded by, followed by, or that otherwise include the words believes, expects, anticipates, intents, projects, estimates, plans, and similar expressions or future or conditional verbs, such as will, should, would, may, could, are generally forward-looking in nature and non-historical facts, although not all looking forward-looking statements include the foregoing. Although the company believes that the expectations reflected in such forward-looking statements are reasonable, it can provide no assurance that such expectations will prove to have been correct. These risks should not be construed as exhaustive and should be read together with other cautionary statements, including the company's quarterly reports on Form 10-Q, annual reports on Form 10-K, and current reports on Form 8-K filed with the Securities and Exchange Commission. Any forward-looking statement speaks only as the date on which it was initially made. Except as required by law, the company assumes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, change circumstances, or otherwise. I'd now like to turn the call over to Ellery Roberts. Please go ahead, Ellery.
Thank you, Natalia. We appreciate you joining us today as we provide a business update and discuss the outlook for our business. This quarter marks a meaningful operational turnaround for 1847, driven largely by the outstanding performance of our subsidiary CMD and the significant value that's been created since the acquisition. CMD continues to outperform expectations and remains a key driver of both growth and profitability across the organization. Revenue grew 256% year over year to $13.6 million, reflecting continued operational momentum and strong execution across the business. Gross profit increased 180% to $6.7 million, and operating income improved by nearly $5.9 million to $2.6 million. Even excluding the non-cash gain related to the change in fair value of warrant liabilities, we achieved profitability for the quarter, an important milestone for the company, and a clear sign that our strategy is working. With a nine-month period of 2025, revenue increased 326% to $36.5 million, reflecting a $27.9 million improvement over the prior year, and we generated $3 million in positive cash flow from continuing operations. These results underscore the strength of our operational turnaround, discipline, cost management, and the growing contribution from CMD. As we move forward, our focus remains on sustaining this momentum, improving margins, driving efficiency, and positioning our portfolio companies for continued growth. We're encouraged by the progress we've made, and we believe we're entering the next phase of expansion from a position of strength. Turning now to operations, our results this quarter reflect the effectiveness of our strategy, highlighted by the exceptional performance of CMD and the tangible value generated since bringing it into our portfolio. CMD continues to exceed expectations, validating our strategic rationale for the acquisition and positioning the company for sustained growth and value creation. This strengthened position has allowed us to begin reinvesting in portfolio companies that have been capital constrained, including Kyle's Custom Woodshop and Woolo Manufacturing. For Kyle's, our plan is to leverage the intellectual property and Boise Market presence of our subsidiary, Innovative Cabinets, to accelerate recovery and drive long-term growth. At WOLO, following a detailed strategic review last month, we made the decision to retain and rebuild the business rather than divest, based on the significant long-term potential we see. Over the past quarter, we've streamlined operations by exiting a legacy lease, transitioning to a third-party logistics and refocusing the business on higher-margin e-commerce channels, including O'Reilly Auto Parts, Ranger, and Amazon. With a leaner cost structure and sharper commercial focus, we believe WOLO is now positioned for sustainable, profitable growth going forward. Before I turn the call over to Bernice, I want to emphasize that these results reflect not just a financial turnaround, with the operational strength and strategic discipline across our organization. CMD continues to outperform expectations, and the progress at Kyle's and WOLO has created a solid foundation for sustained growth and value creation. We remain focused on execution, profitability, and expanding our opportunities across the portfolio. At this time, I would now like to turn the call over to Vinice for a more detailed assessment of our financial performance within the quarter.
Thank you, Ellery. Good morning, everyone. Revenue increased by $9.8 million, or 256.4%, to $13.6 million for the three months ended September 30, 2025, from $3.8 million for the three months ended September 30, 2024. The increase in revenue was primarily attributed to the acquisition of CMD, which contributed $11.8 million to revenues for the three months ended September 30, 2025. Cost of revenues increased by $5.5 million, or 384%, to $6.9 million for the three months ended September 30, 2025, from $1.4 million for the three months ended September 30, 2024. Such increase was primarily attributed to the acquisition of CMD, which contributed $5.9 million to the cost of revenue for the three months ended September 30, 2025. Personal costs decreased by $285,000, or 13.1%, to $1.9 million for the three months ended September 30, 2025, from $2.2 million for the three months ended September 30, 2024. Total operating expenses were $10.9 million compared to $7.1 million Q3 2024. This resulted in income from operations of $2.6 million compared to the loss of $3.3 million a year ago. Total other income net was $30.6 million compared to the expense net of $2.5 million in Q3 2024, mainly due to the gain in the change in fair value of warrant liabilities of $32 million, partially offset by interest expense of $1.1 million, amortized by debt discounts of $260,000 and other expense, approximately $90,000. Net income from continuing operations was $32.6 million for Q3 2025 versus a net loss of $5.4 million for Q3 2024. Net income was largely driven by the gain on change in fair value of warrant liability. as well as the operating income resulting from the significant revenues generated by CMD. Excluding the non-cash gain relating to the change in the fair value of warrant liability, the company's net income would have been $0.6 million for the third quarter of 2025. We ended the quarter with cash, cash equivalent, in restricted cash of approximately $2.7 million at September 30th, 2025, compared to $3.8 million at December 31st, 2024. Now I would like to turn the call back to Ellery for closing remarks.
Thank you, Renice. We believe Q3 2025 results and recent developments reflect our discipline approach to value creation and our ongoing strategy of acquiring, strengthening, and monetizing undervalued businesses. The progress we've achieved this quarter underscores the strength of our operating model, the quality of our portfolio companies, and the focus of our leadership team. We believe the company is now in a stronger position than ever, operationally, financially, and strategically, to build on this momentum. As we look ahead, we are reaffirming our 2025 guidance, which calls for a revenue of more than $45 million and end income of approximately $1.3 million. Looking ahead to 2026, we anticipate revenue will exceed $50 million and operating income will be around $12 million. Our priorities remain clear, driving profitability, investing in high return opportunities across our portfolio, and delivering meaningful, sustainable value for our shareholders. With that, I'd like to turn the call over to Natalia to lead us through the Q&A discussion with questions that we have received
from investors. Thanks, Ellery. In our conference call announcement press release, we suggest that interested parties submit their questions in advance. We'd like to address those questions for you now. Some questions were duplicative, so we did our best to reconcile those where possible. If you have any further questions after the call, please feel free to follow up with Investor relations, and we'll be sure to respond as quickly as possible. Our first question, is the company planning to apply for relisting or uplisting to a major exchange, such as the NASDAQ or NYSE, and would this process include a potential reverse stock split to meet the
minimum share price requirements? Thanks, Natalia. At this time, we believe that relisting or uplisting to a major exchange is in the best interest of the company, but we must meet certain financial requirements for relisting, most notably shareholders' equity, and that may take several quarters to meet the goal without raising additional As our operations improve, that goal may become a more near-term possibility. In light of that, we do not see a reverse stock split as part of the equation, but that may change.
Thanks. Our next question, will the current gray status of LBRA delay the implementation of the Series G preferred stock offering?
The Series G preferred exchange offering was approved on April 2nd, and we were delisted on April 3rd. Since our delisting, we have not taken any action to move forward on the Series G preferred exchange offering, but we will continue to investigate the possibility of such an exchange for the common shareholders in the future.
Our next question is, will the payment of approximately $89 million in debt require a solution of common stockholders' ownership, or can this be paid out of earnings?
One point of clarification, we do not have $89 million of debt on our balance sheet. For our 10-Q, you'll be able to find on page 40 that we have $31.4 million of debt, which we intend to pay off through earnings, but from the proceeds of the sale of our assets over time.
Our next question, might a common stock dividend be considered in the next year or two, considering how well 1847 Holdings is progressing toward profitability?
We believe that after repaying our debt and rebuilding our portfolio, a common stock dividend may be a possibility, but we can't put a timeline at this time currently, we can't put a timeline on when that may be an eventuality.
Thank you. There are no further questions. This concludes the Q&A, and I'll turn it back over to Ellery for final closing remarks.
Thanks, Natalia, and thank you to everyone who joined the call today. As always, we appreciate the support of all of our shareholders and look forward to providing more updates as developments unfold.
Thank you. And this concludes today's conference, and you may disconnect your lines at this time.