Brilliant Earth (US:BRLT)2023-05-11 16:00Financial Position - As of March 31, 2023, total assets amounted to $262.3 million, a slight decrease from $262.6 million as of December 31, 2022[22] - Total liabilities as of March 31, 2023, were $168.9 million, down from $169.4 million at the end of 2022[22] - Current assets decreased to $195.6 million from $205.9 million, primarily due to a reduction in cash and cash equivalents[22] - Total equity attributable to Brilliant Earth Group, Inc. increased to $11.2 million as of March 31, 2023, from $10.9 million at the end of 2022[22] - The current portion of long-term debt remained stable at $3.25 million as of March 31, 2023[22] - The company had a cash balance of $146.0 million as of March 31, 2023, with working capital of ($19.0) million[145] - As of March 31, 2023, cash, cash equivalents, and restricted cash totaled $146.2 million, down from $165.1 million at the end of the previous year[167] Revenue and Income - The company reported a net income of $356,000 for the three months ended March 31, 2023, compared to $3.0 million for the same period in 2022[27] - Net sales decreased by 2.3% to $97.7 million for the three months ended March 31, 2023, compared to $100.0 million for the same period in 2022[87] - The company reported a net loss of $0.4 million for the three months ended March 31, 2023, compared to a net income of $3.4 million for the same period in 2022[87] - Adjusted EBITDA was $5.5 million, down from $8.4 million for the three months ended March 31, 2022, resulting in an adjusted EBITDA margin of 5.7% compared to 8.4% in the prior year[87] - The income tax benefit for the three months ended March 31, 2023, was less than $0.1 million, compared to an income tax provision of $0.1 million for the same period in 2022[63] Inventory and Expenses - Total net inventories decreased from $39.3 million as of December 31, 2022, to $37.9 million as of March 31, 2023, representing a decline of approximately 3.6%[33] - The allowance for inventory obsolescence increased from $307,000 to $371,000, indicating a rise of 20.9%[33] - Total accrued expenses and other current liabilities decreased from $37.8 million as of December 31, 2022, to $30.1 million as of March 31, 2023, a reduction of approximately 20.5%[34] - Selling, general and administrative expenses rose by $9.0 million, or 20.0%, representing 55.0% of net sales, an increase of 1,023 basis points[125] - Depreciation expenses increased to $951,000 from $349,000 year-over-year, while equity-based compensation rose to $2,258,000 from $2,104,000[206] Cash Flow - For the three months ended March 31, 2023, net cash used in operating activities was $2.0 million, a decrease of $2.2 million compared to net cash provided by operating activities of $0.2 million for the same period in 2022[157] - Net cash used in investing activities increased to $4.4 million for the three months ended March 31, 2023, compared to $1.3 million for the same period in 2022, primarily due to increased purchases of property and equipment[169] - Net cash used in financing activities decreased to $2.3 million for the three months ended March 31, 2023, from $6.9 million in the same period in 2022, mainly due to lower tax distributions paid to members[170] - The Company reported a net decrease in cash, cash equivalents, and restricted cash of $8,677,000 for the period[206] Operational Highlights - The company operated 28 showroom locations and plans to strategically open more showrooms in the future to enhance brand awareness and drive sales[102] - The company has sold to consumers in over 50 countries, indicating a strong potential for global expansion[75] - The company aims to leverage its in-house design capabilities to expand its product assortment beyond engagement and bridal jewelry, targeting special occasions and self-purchase[91] - The company has invested in technology to enhance customer experience, including dynamic product visualization and augmented reality try-on, which are expected to drive higher satisfaction and conversion rates[85] - The company’s marketing strategy focuses on increasing brand awareness and customer reach through various channels, including digital and social media[76] Legal and Compliance - The Company is actively involved in legal proceedings, including a case related to the Illinois Biometric Information Privacy Act, which was dismissed[196] - The Company filed a petition to compel arbitration in a labor-related lawsuit, which was denied, and it plans to appeal this decision[197] - As of March 31, 2023, the Company was in compliance with all financial covenants under the SVB Credit Facilities[42] Market Conditions - The current inflationary environment and changes in macro-level consumer spending trends could negatively impact the company's operating results[95] - The company anticipates significant cash payments under the TRA, which will reduce overall cash flow available[163] - The company is subject to covenants in its financing arrangements that may restrict distributions from Brilliant Earth, LLC[162] - The company’s ability to declare and pay cash dividends may be limited if Brilliant Earth, LLC does not have sufficient funds to make distributions[173]