December 2025

Management Business Review

Monthly Performance & Financial Results
December 2025 Results

KPI Scorecard Summary

Total KPIs
8
On Target
4
Off Target
4
Revenue
Actual $827K
Target $824K
Status ✓ On
Gross Margin %
Actual 26.1%
Target 26.0%
Status ✓ On
Order Fill Rate %
Actual 97.6%
Target 97.0%
Status ✓ On
OpEx % of Revenue
Actual 25.1%
Target 25.3%
Status ✓ On

KPI Exceptions & Issues

Days Sales Outstanding (DSO)
Actual: 51.2 days Target: 45.0 days Variance: (6.2) days off target
Streak: 3 months off target — Persistent cash flow concern requiring immediate attention
On-Time Delivery %
Actual: 93.3% Target: 95.0% Variance: (1.7%) below target
Streak: 3 months below target — Operational delivery challenges impacting customer satisfaction
Active Customers
Actual: 40 Target: 42 Variance: (2) customers below target
Streak: 2 months below target — Customer attrition trend requires investigation
Inventory Turns
Actual: 5.33 turns Target: 6.50 turns Variance: (1.17) turns below target
Streak: 1 month below target — Inventory management needs optimization

December 2025 Financial Results

Monthly Performance vs Budget

Line Item Actual Budget Variance %
Revenue $827K $824K $3K 0.38%
Cost of Goods Sold $611K $603K ($8K) (1.4%)
Gross Profit $215K $221K ($5K) (2.4%)
Operating Expenses $208K $208K $438 0.21%
Operating Income $8K $13K ($5K) (38.0%)
Gross Margin % 26.1% 26.8% (0.7)
MoM Revenue Change
($72K)
(8.0%) vs Nov
Gross Margin vs Budget
(0.7)
Below target
Operating Margin
1.0%
Below budget

Year-to-Date Financial Results

YTD Performance vs Budget (12 months closed)

Line Item Actual Budget Variance %
Revenue $11.2M $11.6M ($362K) (3.1%)
Cost of Goods Sold $7.9M $8.1M $196K 2.0%
Gross Profit $2.9M $3.1M ($194K) (6.3%)
Operating Expenses $2.5M $2.5M ($649) (0.03%)
Operating Income $388K $583K ($195K) (33.5%)
Gross Margin % 25.9% 26.8% (0.9)
Full fiscal year closed with revenue $362K below budget and operating income significantly impacted by gross margin headwinds.

Key Variance Analysis

December (Month) - Top Variances

Line Item Actual Budget Variance Direction
Other Operating $16K $10K ($6K) Unfavorable
Cost of Goods Sold $584K $578K ($6K) Unfavorable
Technology $10K $14K $4K Favorable

Year-to-Date - Top Variances

Line Item Actual Budget Variance Direction
Revenue $11.2M $11.6M ($362K) Unfavorable
Cost of Goods Sold $7.9M $8.1M $196K Favorable
Salaries and Wages $1.6M $1.5M ($38K) Unfavorable

Executive Summary & Outlook

Performance Highlights

  • Revenue: December came in $3K above budget at $827K, showing stable monthly performance despite 8% MoM decline from November
  • Margin: Gross margin at 26.1% exceeded target by 0.1%, but remains 0.7 points below budget due to higher COGS
  • OpEx Control: Operating expenses well controlled at 25.1% of revenue, favorable to 25.3% target
  • Operational Metrics: Order fill rate strong at 97.6%, on-time delivery at 93.3% remains below target

Areas of Concern

  • Days Sales Outstanding: At 51.2 days, DSO is 6.2 days above target and has persisted off-target for 3 consecutive months — indicating cash flow challenges
  • Active Customers: Customer count declined to 40, down 2 from target and 1 from prior month — sign of customer attrition
  • Inventory Turns: Inventory turns declined to 5.33, well below 6.5 target — suggests working capital tied up in excess inventory
  • YTD Operating Income: Full year operating income $195K below budget (33.5%) due to revenue miss and margin compression

Key Actions Required

  • Urgent review of accounts receivable and payment terms to address DSO creep
  • Customer retention initiative to reverse 2-month downtrend in active customers
  • Inventory optimization and demand planning to improve inventory turns
  • Operations review to improve on-time delivery performance above 95% target