Surge Components, Inc. reported a modest increase in financial performance for the three months ending February 28, 2025, with net sales rising to $7.23 million, a 2.5% increase from $7.05 million in the same period last year. The company's gross profit remained relatively stable, increasing slightly to $2.05 million from $2.04 million, while the gross margin decreased to 28.3% from 29.0%. The increase in sales was attributed to new customer acquisitions and expanded business with existing clients, despite ongoing pressures from customers for price reductions.
The company experienced a significant turnaround in profitability, reporting a net income of $57,356 compared to a net loss of $72,001 in the prior year. This improvement was supported by a notable increase in other income, which rose to $124,966 from $24,473, primarily due to investment income from U.S. Treasury securities. However, the company faced challenges with operating expenses, which decreased overall but included increases in certain areas such as officer salaries and professional fees.
In terms of operational metrics, Surge Components maintained a stable customer base, with two customers accounting for 18% and 17% of net sales during the quarter. The company also reported a decrease in cash reserves, ending the period with $3.87 million, down from $5.63 million at the end of November 2024. This decline was attributed to cash used in investing activities, particularly the purchase of marketable securities, which totaled $1.63 million for the quarter.
Looking ahead, Surge Components anticipates continued challenges in the electronics market, including inflationary pressures and potential impacts from tariffs on imported goods. The company is exploring growth opportunities while managing its cash resources effectively. Surge's management remains cautiously optimistic about navigating these challenges, emphasizing the importance of adapting to changing customer demands and maintaining a competitive edge in the market.
Overall, Surge Components, Inc. is positioned to leverage its recent financial improvements while addressing the complexities of the current economic landscape, with a focus on sustaining growth and profitability in the coming quarters.
About SURGE COMPONENTS INC
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