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May 2026 Financial Review
April's $700K included the Food Processing job ($326K at 31.6% margin). May at $420.8K with $10.6K profit (2.5% margin) is closer to the Feb–Mar run-rate. The question for June is whether new higher-margin work has come in to replace it.
The LOC rose from $250K to $436.8K, primarily to fund the $191.8K A/P paydown. Whether this reflects a credit limit increase or a temporary overrun is worth confirming with the lender. Either way, it's worth discussing terms if this balance stays elevated.
At $420K revenue, overhead runs 24% of sales vs. 15% in April. The overhead structure is largely fixed — it doesn't scale down with revenue. This is manageable if June revenue recovers, but worth monitoring if lower-revenue months continue.
| Month | Revenue | COGS | Gross Margin | Margin % | Net Profit |
|---|---|---|---|---|---|
| January | $367.6K | $295.7K | $71.9K | 19.6% | $53.1K |
| February | $415.3K | $348.7K | $66.6K | 16.0% | $32.7K |
| March | $565.7K | $472.9K | $92.8K | 16.4% | -$4.8K |
| April | $700.6K | $514.9K | $185.6K | 26.5% | $159.7K |
| May | $420.8K | $351.4K | $69.3K | 16.5% | $10.6K |
| YTD (Jan–May) | $2,469.9K | $1,983.6K | $486.3K | 19.7% | $251.3K |
| 5-Month Average | $494.0K | $50.3K |
Pattern: April was the outlier. Feb, Mar, and May are your true run-rate: ~16% gross margin, $30–33K profit per month. April's 26.5% margin was driven by the Food Processing job. Without it, you're back to baseline.
| Budget | Actual | Variance | % | |
|---|---|---|---|---|
| May 2026 | ||||
| Revenue | $600.0K | $420.8K | -$179.2K | -29.9% |
| Gross Margin | $117.4K | $69.3K | -$48.0K | -40.9% |
| EBITDA | $117.4K | $40.9K | -$76.5K | -65.2% |
| Net Profit | $86.4K | $10.6K | -$75.8K | -87.7% |
| YTD Jan–May | ||||
| Revenue | $2,532.9K | $2,469.9K | -$63.0K | -2.5% |
| Gross Margin | $495.4K | $486.3K | -$9.1K | -1.8% |
| Net Profit | $341.4K | $251.3K | -$90.1K | -26.4% |
May missed the $600K revenue target by $179K — almost entirely due to the Food Processing job not repeating. YTD revenue is within 2.5% of plan. YTD net profit trails budget by $90K, with most of the gap created in May.
Cash moved from $46.7K to $27.0K in May. The LOC increased by $186.8K to fund a $191.8K A/P paydown — the two largely offset each other.
*Non-Cash = D&A add-backs ($27,140). †Other/Net = Inventory build (-$17,329) + Prepaids (-$2,657) + CapEx (-$10,084) + Loan repayment (-$12,321) + Deposits (+$1,917) + Withholding/Other (+$17,171) = -$23,303. Source: Cash Flow Statement, Page 1 (Month to Date).
| Item | April | May | Change |
|---|---|---|---|
| Accounts Receivable | $428.2K | $457.3K | +$29.1K |
| Accounts Payable | $339.9K | $148.1K | –$191.8K* |
| Inventory | $1,303.2K | $1,320.6K | +$17.3K |
| Customer Deposits | $67.2K | $69.1K | +$1.9K |
Key driver: You paid down $191.8K of A/P in May. This was a large cash outflow (probably past-due balances). A/R ticked up, suggesting collections are not keeping pace with invoicing.
Total overhead was $101K in May — nearly identical to April's $104K. The difference: April absorbed it over $700K in revenue (14.9%). May absorbed it over $420K (24.0%). Same cost structure, very different outcome depending on revenue.
| Account | May Amount | % of Revenue | Flag |
|---|---|---|---|
| Overhead Salaries & Benefits | $65,404 | 15.5% | Largest single item. Are all roles fully utilized in slower months? |
| Employee Benefits | $30,076 | 7.1% | Review plan design and carrier rates at next renewal. |
| IT Expense | $12,856 | 3.1% | Highest discretionary overhead line. Review software subscriptions for unused licenses. |
| Sales Salaries | $14,118 | 3.4% | Is this fixed compensation or variable? Consider commission structure in slower months. |
| Training Expense | $7,268 | 1.7% | Higher than typical. Was this scheduled or discretionary? Could be deferred. |
| Insurance | $9,481 | 2.3% | Review at next renewal for competitive quotes. |
| Rental Equipment | $3,292 | 0.8% | Can rentals be deferred or renegotiated during slower production months? |
Note: Rent ($6,250) and Utilities ($3,462) are fixed obligations and not flagged. The accounts above represent ~$142K in monthly costs where there may be flexibility.