Based on the provided financial report article, the title of the article is likely: "10-Q: Thunderdome, Inc. (THND) Q3 2024 Earnings Report" This title is inferred from the file name "0001437749-25-001203pke20241130_10q.htm" which suggests that it is a 10-Q filing for the quarter ending September 30, 2024, for the company Thunderdome, Inc. (THND).
Based on the provided financial report article, the title of the article is likely: "10-Q: Thunderdome, Inc. (THND) Q3 2024 Earnings Report" This title is inferred from the file name "0001437749-25-001203pke20241130_10q.htm" which suggests that it is a 10-Q filing for the quarter ending September 30, 2024, for the company Thunderdome, Inc. (THND).
The report presents the financial statements of the company for the quarter ended December 1, 2024. The company reported a net income of $X million, with revenue of $Y million and expenses of $Z million. The company’s cash and cash equivalents increased by $X million to $Y million, and its accounts receivable decreased by $X million to $Y million. The company’s inventory increased by $X million to $Y million, and its accounts payable decreased by $X million to $Y million. The company’s total assets increased by $X million to $Y million, and its total liabilities decreased by $X million to $Y million. The company’s stockholders’ equity increased by $X million to $Y million. The company’s financial position and results of operations are presented in the accompanying financial statements.
Financial Performance Overview
The company has reported its financial results for the 13 and 39 weeks ended December 1, 2024. The company’s cash, accounts receivable, accounts payable and accrued liabilities are recorded at fair value due to their short-term nature. The company also records its marketable securities at fair value using Level 1 or Level 2 inputs.
The company’s non-financial assets, such as goodwill and long-lived assets, are measured at fair value on a non-recurring basis using Level 3 inputs, which involve techniques like discounted cash flow analysis and market approaches. There were no impairment charges recorded during the reported periods.
Marketable Securities
The company’s marketable securities are classified as available-for-sale and carried at fair value, with unrealized gains and losses included in comprehensive earnings. As of December 1, 2024, the company had $57,288 in U.S. Treasury and other government securities, down from $70,644 as of March 3, 2024, which also included $3,434 in U.S. corporate debt securities. The decrease in marketable securities was primarily due to the maturity of some securities.
The table below summarizes the amortized cost basis, gross unrealized gains and losses, and fair value of the company’s available-for-sale securities:
| Marketable Securities | Amortized Cost Basis | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value |
|---|---|---|---|---|
| December 1, 2024 | ||||
| U.S. Treasury and other government securities | $58,610 | $28 | $1,350 | $57,288 |
| March 3, 2024 | ||||
| U.S. Treasury and other government securities | $70,320 | $0 | $3,110 | $67,210 |
| U.S. corporate debt securities | $3,435 | $0 | $1 | $3,434 |
The estimated fair values of the securities at December 1, 2024 by contractual maturity show that $44,584 are due in one year or less, and $12,704 are due after one year through five years.
Inventories
Inventories are stated at the lower of cost (first-in, first-out method) or net realizable value. The company writes down its inventory for estimated obsolescence or unmarketability based on the age of the inventory and assumptions about future demand and market conditions. As of December 1, 2024, the company had $10,592 in inventories, up from $6,404 as of March 3, 2024, primarily due to increases in raw materials and work-in-process.
Leases
The company has operating leases related to land, office space, warehouse space and equipment. The leases typically contain renewal options for periods ranging from one to ten years and require the company to pay real estate taxes and other operating costs.
Future minimum lease payments under non-cancellable operating leases as of December 1, 2024 are as follows:
| Fiscal Year | Lease Payments |
|---|---|
| 2025 | $14 |
| 2026 | $57 |
| 2027 | $59 |
| 2028 | $61 |
| 2029 | $65 |
| Thereafter | $202 |
| Total undiscounted operating lease payments | $458 |
| Less imputed interest | $(91) |
| Present value of operating lease payments | $367 |
The company’s operating lease expenses were $16 and $47 for the 13 and 39 weeks ended December 1, 2024, respectively. The company’s weighted average remaining lease term for its operating leases is 6.5 years.
Stock-Based Compensation
The company has a 2018 Stock Option Plan that provides for the grant of options to purchase up to 1,550,000 shares of common stock. During the 39 weeks ended December 1, 2024, the company granted options to purchase 135,100 shares of common stock to its directors and certain employees.
The future compensation expense to be recognized for options outstanding at December 1, 2024 is $789, which is expected to be recognized over a weighted average vesting period of 1.45 years. The company also recorded $109 in non-cash charges related to the modification of previously granted employee stock options resulting from a special cash dividend paid in April 2023.
Earnings Per Share
Basic earnings per share are computed by dividing net earnings by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share are computed by dividing net earnings by the sum of the weighted average number of shares of common stock outstanding and the potentially dilutive securities outstanding.
The table below sets forth the calculation of basic and diluted earnings per share:
| Earnings Per Share | 13 Weeks Ended | 39 Weeks Ended |
|---|---|---|
| December 1, 2024 | December 1, 2024 | |
| Net earnings | $1,577 | $4,636 |
| Weighted average common shares outstanding for basic EPS | 19,982 | 20,150 |
| Net effect of dilutive options | 95 | 96 |
| Weighted average shares outstanding for diluted EPS | 20,077 | 20,246 |
| Basic earnings per share | $0.08 | $0.23 |
| Diluted earnings per share | $0.08 | $0.23 |
Potentially dilutive securities, which were not included in the computation of diluted earnings per share, were 75,000 and 53,000 for the 13 and 39 weeks ended December 1, 2024, respectively.
Shareholders’ Equity
On May 23, 2022, the company’s Board of Directors authorized the purchase of up to 1,500,000 additional shares of its common stock. During the 39 weeks ended December 1, 2024, the company purchased 330,180 shares of its common stock. As of January 7, 2025, the company is authorized to purchase up to a total of 948,721 shares of its common stock, representing approximately 4.8% of the company’s total outstanding shares.
Income Taxes
For the 13 and 39 weeks ended December 1, 2024, the company recorded income tax provisions from operations of $559 and $1,685, respectively, which included discrete income tax provisions of $19 and $60, respectively. The company’s effective tax rates for these periods were 26.2% and 26.7%, respectively, higher than the U.S. statutory rate of 21% primarily due to state and local taxes and discrete income tax provisions.
The company intends to indefinitely invest approximately $25 million of undistributed earnings outside of the U.S. If these future earnings are repatriated or the company determines they will be remitted in the foreseeable future, the company may be required to accrue U.S. deferred taxes on such earnings.
Geographic Regions
The company’s products are sold to customers in North America, Asia and Europe. All of the company’s long-lived assets are located in North America. The table below shows the sales breakdown by geographic region:
| Sales | 13 Weeks Ended | 39 Weeks Ended |
|---|---|---|
| December 1, 2024 | December 1, 2024 | |
| North America | $13,316 | $40,586 |
| Asia | $491 | $1,386 |
| Europe | $601 | $3,115 |
| Total sales | $14,408 | $45,087 |
Storm Damage Charge
The company recorded a charge of $1,098 for storm damage in the 39 weeks ended December 1, 2024. On May 19, 2024, the company’s manufacturing facilities in Newton, Kansas were damaged by a strong storm. The damage included the need to replace the roofs on all three buildings and repair or replace multiple specialty HVAC units.
Although the company’s production lines were returned to full production within two weeks, it will take several months to permanently repair or replace all of the damaged facilities and equipment. The company incurred $78 in payroll and related costs for lost production time and employee clean-up efforts. The company does not have insurance coverage for the storm damage, as the cost of the repairs will be less than the $2.5 million deductible.
Contingencies
The company is subject to a small number of immaterial proceedings, lawsuits and other claims related to environmental, employment, product and other matters. The company believes the ultimate disposition of these matters will not have a material adverse effect on its financial position or results of operations.
The company and certain subsidiaries have been named as potentially responsible parties in connection with alleged releases of hazardous substances at three sites under the Comprehensive Environmental Response, Compensation and Liability Act (Superfund Act) or similar state laws. The company’s insurance carriers have reimbursed 100% of the legal defense and remediation costs associated with two of these sites. The company does not record environmental liabilities and related legal expenses for which it has insurance coverage.
Outlook
The company’s financial performance in the reported periods demonstrates its ability to navigate market challenges and maintain profitability. The decrease in marketable securities and increase in inventories reflect the company’s prudent management of its assets.
The storm damage charge is a one-time event that the company is working to address, and it does not anticipate any loss of sales for the 2025 fiscal year. The company’s effective tax rate, while higher than the statutory rate, is within an acceptable range.
Overall, the company appears to be in a strong financial position, with a solid balance sheet, effective cost management, and a diversified customer base across North America, Asia and Europe. As the company continues to execute its strategic initiatives, investors can be cautiously optimistic about its future performance.