Thu, May 15, 5:04 PM (39 days ago)
**Reliability Incorporated (RLBY) Q1 2025 Financial Summary** **Company Overview:** Reliability Incorporated, trading as RLBY, is a provider of Employer of Record (EOR) and temporary Media and Information Technology (IT) staffing services. The company operates in four segments: EOR, Recruiting and Staffing, Direct Hire, and Video and Multimedia Production. **Financial Performance (Q1 2025 vs. Q1 2024):** - **Revenue:** $4,746,000 (down 10.6% from $5,295,000). - **Gross Profit:** $641,000 (down 9.6% from $709,000). - **Gross Margin:** 13.5% (up 0.1 percentage points from 13.4%). - **Operating Loss:** $382,000 (up 60.5% from $238,000). - **Net Loss:** $333,000 (up 152.3% from $132,000). **Key Financial Metrics:** - **Cash Flow from Operations:** $959,000 (up from -$312,000). - **Capital Expenditures:** $1,000 (down from $9,132,000). - **Days Sales Outstanding (DSO):** 49.5 days (improved from 49.2 days). - **Working Capital:** $6,966,000 (down from $7,296,000). **Segment Performance:** - **EOR:** Revenue down 17.9%, gross margin down 0.2 percentage points. - **Staffing:** Revenue up 39.7%, gross margin down 0.5 percentage points. - **Video Production:** Revenue up 53.1%, gross margin up 17.1 percentage points. - **Direct Hire:** Revenue down 58.3%, gross margin down 20 basis points. **Liquidity and Capital Resources:** - **Factoring Facility:** Access to up to 93% of unfactored invoices, totaling approximately $1.5 million in available liquidity. - **Receivable Purchase Agreements:** New agreements with JP Morgan and others to improve cash conversion cycle. - **Notes Receivable:** $5,973,000 from related parties, with a total award value of $8,333,000. **Future Outlook and Uncertainties:** - **Legal Matters:** Ongoing arbitration and collection efforts with the Vivos Group, with a court-appointed receiver managing the process. - **Regulatory Risks:** Potential impacts from federal budget reviews and trade restrictions. - **Market Risks:** Dependence on a few large clients and potential changes in client spending patterns. **Management's Assessment:** - Management believes the company will continue as a going concern and meet its financial obligations. - Key factors supporting this assessment include a positive cash flow forecast, reduction in legal fees, collection of notes receivable, and improved financing arrangements. **Conclusion:** Reliability Incorporated faces challenges in revenue growth and profitability, but management is taking steps to improve liquidity and manage costs. The company's future performance will depend on its ability to collect on outstanding notes receivable, manage legal and regulatory risks, and adapt to changes in client spending patterns.