1Revenue reached $5.2 million, driven by an increase in performance obligations related to CFD studies, customer witness tests, flare shipments, and spare part deliveries, partially offset by a decrease in boiler burner deliveries.
2Gross profit was $1.4 million, with a gross margin of 27.2%. The year-over-year gross profit decreased due to additional warranty expenses, partially offset by an increase in spare parts and engineering service orders which carry a favorable margin profile.
3Operating loss widened to -$6.7 million, reflecting an operating margin of -127.5%. This was influenced by increased expenses, though partially offset by a decrease in costs related to the company's China dormancy accrual from the prior year.
4Net loss was -$5.5 million, resulting in diluted earnings per share of -$0.99. Operating activities used $4.7 million in cash, primarily due to this net loss and an increase in accounts receivable, partially offset by net non-cash expenses.
5Free cash flow was -$4.7 million. The company's cash balance decreased compared to the prior year-end, and management acknowledges there is no assurance that long-term plans will result in profitable operations or enable continuation as a going concern.
6The business faces operational risks, including potential supply interruptions, production constraints, or working capital limitations from subcontractors, which could adversely affect operations, though the company intends to pass along production cost increases to customers where appropriate.