Electro-Sensors(ELSE) - 2024 Q1 - Quarterly Report

Financial Performance - Net sales for Q1 2024 were $2,244, an increase of$ 199, or 9.7%, from $2,045 in Q1 2023, driven by larger orders for facility upgrades and increased sales of wired and wireless systems [61]. - Gross profit for Q1 2024 was$ 1,080, an increase of $58, or 5.7%, with a gross margin decrease to 48.1% from 50.0% in Q1 2023 due to rising material and labor costs [62]. - Total operating expenses for Q1 2024 were$ 1,180, an increase of $20, or 1.7%, but decreased as a percentage of net sales to 52.6% from 56.7% in Q1 2023 [63]. - Net non-operating income increased by$ 23, or 24.7%, in Q1 2024 compared to Q1 2023, attributed to higher interest income from Treasury Bills [64]. - Income before income tax expense was $16 in Q1 2024, an increase of$ 61 compared to a loss of $45 in Q1 2023, driven by higher revenues and increased interest income [65]. Cash Flow - Cash and cash equivalents were$ 10,072 at March 31, 2024, up from $9,870 at December 31, 2023, primarily due to increased cash from operating activities [68]. - Cash from operating activities was$ 202 for Q1 2024, compared to cash used of $112 in Q1 2023, reflecting increased net income and decreased trade receivables [69]. Taxation - The effective tax rate for Q1 2024 was 31%, compared to 2.2% in Q1 2023, due to changes in deferred taxes [66]. Operational Challenges - The company is facing supply chain disruptions and price increases for components, which may affect gross margins and timely deliveries [72]. Strategic Growth - The company continues to seek growth opportunities through internal product development and external acquisitions, with a special committee exploring strategic alternatives [73].