Electro-Sensors(ELSE) - 2023 Q3 - Quarterly Report

Financial Performance - Net sales for Q3 2023 were $2,057, a decrease of$159, or 7.2%, from $2,216 in Q3 2022; for the nine months ended September 30, 2023, net sales were$6,239, a decrease of $676, or 9.8$6,915 in the same period in 2022[69]. - Gross profit for Q3 2023 was $993, a decrease of$170, or 14.6%, compared to Q3 2022; gross profit for the nine months ended September 30, 2023, was $3,083, a decrease of$654, or 17.5%, from the same period in 2022[70]. - Income before income tax expense for Q3 2023 was $83, a decrease of$71 compared to $154 in Q3 2022; for the nine months ended September 30, 2023, it was$176, an increase of $393 compared to a loss of$217 in the same period in 2022[74]. - For the three months ended September 30, 2023, the Company reported a Net Income (Loss) of $8 million, compared to a Net Income of$122 million for the same period in 2022[91]. - Adjusted Net Income for the three months ended September 30, 2023, was $8 million, while it was$184 million for the same period in 2022, reflecting a decrease of approximately 95.65%[91]. - For the nine months ended September 30, 2023, the Company reported a Net Income (Loss) of $80 million, compared to a Net Loss of$171 million for the same period in 2022[91]. - Adjusted Net Income for the nine months ended September 30, 2023, was $80 million, down from$505 million for the same period in 2022, indicating a decrease of approximately 84.24%[91]. Operating Expenses - Total operating expenses for Q3 2023 decreased by $25, or 2.4$1,019, while as a percentage of net sales, it increased to 49.5% from 47.1%; for the nine months ended September 30, 2023, total operating expenses decreased by $794, or 19.9$3,203[72]. Cash Flow - Cash and cash equivalents were $3,902 at September 30, 2023, down from$7,646 at December 31, 2022; total cash, cash equivalents, and investments were $9,928 at September 30, 2023, compared to$9,682 at December 31, 2022[77]. - Cash from operating activities was $92 for the nine months ended September 30, 2023, compared to cash used in operating activities of$213 for the same period in 2022, reflecting a $305 increase due to higher net income and decreased trade receivables[78]. - Cash used in investing activities was$3,831 for the nine months ended September 30, 2023, compared to cash from investing activities of $2,991 for the same period in 2022, primarily due to increased purchases of Treasury Bills[79]. Non-Operating Income - Net non-operating income increased by$74, or 211.4%, for Q3 2023 compared to Q3 2022; for the nine months ended September 30, 2023, it increased by $253, or 588.4$79 million in legal and other professional fees related to the Mobile X merger opportunity for the three months ended September 30, 2022[90]. - Total merger-related expenses for the nine months ended September 30, 2022, amounted to approximately $856 million[90]. - The Company believes that adding back merger-related costs provides a more accurate portrayal of underlying business results and trends[88]. - The income tax benefit of merger-related expenses for the three months ended September 30, 2022, was$(17) million, and for the nine months ended September 30, 2022, it was $(180) million[91]. - The Company is using "Adjusted Net Income" as a non-GAAP financial measure to facilitate comparisons and analysis of its operating performance[87]. Supply Chain Issues - The company is experiencing supply chain disruptions and price increases for components, which may affect sales and profit margins[82].