They invested in the business by opening the design center, offices, and trucks and installation equipment. I hope they don't invest more in subsequent quarters and eat up all the profits like they did in Q1.
The reason for the loss vs. profit is right in the 10-Q:
They stated something to the effect of 20 lost days due to rain, and clarified on the CC that in CA when they don't notify the crews they will be taking the day off at least a day in advance, they have to pay the crews for half a day even though no work gets done. So the cost of labor was increased for the rest of the days they actually did work. Basically, they likely had to pay for 10 full days where nothing got done. Remember we had El-Nino going on this year.
So it's not just that they could have had higher revenue by completing projects on those days, or lower by not completing projects on those days, the net profits were eaten up by "increased cost" of labor on the days they did work, by needing to spread the non-worked days cost across the worked days.
drugmanrx: Lets look at those numbers to try and show where the pressure comes from.
Q1 Revenue: 19.572m - Cost of goods Sold: 13.724m equates to 70.12% of Rev.
= Gross Profit: 5.848m or 29.88% of Rev. Gross Margin
- Operating Expenses: 5.696m which consist of
- Sales and Marketing: 1.202m or 06.14% of Rev. and - General & Admin: 4.494m or 22.96% 0f Rev.
There follow other income and expenses and also taxes which we can ignore for the purpose of this analysis right now.
The Gross margin of 29.88% compares to the Q4 GM of 36.5% which you used in your attempt to look at the 2 quarters side by side.
If you applied the gross margin of Q4 to the revenues of the latest quarter you can see the effect that this had at depressing our Gross profit before we even talk about the operating costs.
.36* 19.572m = 7.144m compared to the 5.696 we managed to actually achieve. Or a shortfall of 1.448m less than we would have been able to achieve at an equivalent GM comparison.
Next you have to look at the two operating Cost Items
S&M 06.14% of rev and G&A 22.96% I can tell you how these stack up to the 2015 average costs. S&M 11% and G&A 16% (I don't right now have access to the Q4 direct comparison.
I can however identify that the expense is mainly found to be in G&A.
These will mainly be staffing in offices of which there are several new ones in that Q and the new Design Centre.