What was the net cash used in operating activities for 1 800 Packouts in 2023?
1_800_Packouts Franchise · 2025 FDDAnswer from 2025 FDD Document
----|--------------------| | Cost of revenues | | 10,001,056 | 5,463,228 | | Gross profit | | 24,596,601 | 20,563,296 | | Operating expenses: | | | | | Selling, general and administrative | | 20,522,378 | 18,837,743 | | Depreciation and amortization | | 11,307,800 | 10,597,574 | | Total operating expenses | _ | 31,830,178 | 29,435,317 | | Loss from operations | | (7,233,577) | (8,872,021) | | Other income (expense): | | | | | Interest expense | | (5,506,427) | (3,821,499) | | Gain on sale of unconsolidated subsidiary | | - | 1,025,637 | | Other income (expense) | | (204,868) | (51,463) | | Total other expense, net | | (5,711,295) | (2,847,325) | | Loss before income taxes | | (12,944,872) | (11,719,346) | | Income tax benefit (provision) | | (765,698) | 1,280,676 | | Net loss | $ | (13,710,570) | $ (10,438,670) |
| For the Year | s Ende | ed December 31, | ||
|---|---|---|---|---|
| 2023 | 2022 | |||
| Cash flows from operating activities: | ||||
| Net loss | $ | (13,710,570) | $ | (10,438,670) |
| Adjustments to reconcile net loss to net cash used in | ||||
| operating activities: | 44 470 440 | 40.550.470 | ||
| Amortization of goodwill and intangible assets Depreciation of fixed assets | 11,179,113 | 10,568,470 | ||
| Amortization of deferred financing costs | 128,687 237,783 | 29,104 213,726 | ||
| Amortization of operating lease right-of-use assets | 265,177 | 108,253 | ||
| Equity-based compensation | 201,589 | 100,233 | ||
| Gain on sale of unconsolidated subsidiary | - | (1,025,637) | ||
| Loss (gain) on disposal of fixed assets | (11,390) | 43,615 | ||
| Provision for bad debt | 47,293 | 25,950 | ||
| Decrease (increase) in: | , | |||
| Accounts receivable | (1,218,971) | (777,114) | ||
| Contract assets | (1,396,460) | (2,540,535) | ||
| Other assets | (428,865) | (535,234) | ||
| Increase (decrease) in: | ||||
| Accounts payable and accrued expenses | (593,573) | 2,012,196 | ||
| Contract liabilities | 3,834,331 | 3,647,786 | ||
| Operating lease liabilities | (243,367) |
Source: Item 23 — RECEIPT (FDD pages 67–238)
What This Means (2025 FDD)
According to 1 800 Packouts's 2025 Franchise Disclosure Document, the net cash used in operating activities for the year 2023 was $(1,284,968). This indicates that 1 800 Packouts spent more cash than it generated from its core business operations during that year. This figure is an important indicator of the company's financial health and its ability to fund its operations through its primary activities.
Several factors contributed to this net cash outflow. These include a net loss of $(13,710,570), adjustments for non-cash items such as amortization of goodwill and intangible assets ($11,179,113), depreciation of fixed assets ($128,687), amortization of deferred financing costs ($237,783), and amortization of operating lease right-of-use assets ($265,177). Changes in working capital accounts also played a role, including decreases in accounts receivable ($(1,218,971)), contract assets ($(1,396,460)), and other assets ($(428,865)), as well as changes in accounts payable and accrued expenses ($(593,573)) and contract liabilities ($3,834,331).
For a prospective franchisee, this information is crucial because it provides insight into the financial stability and operational efficiency of 1 800 Packouts. A negative net cash flow from operating activities could signal potential challenges in managing expenses, generating revenue, or both. It is essential for potential franchisees to further investigate the reasons behind this cash usage and understand the strategies 1 800 Packouts has in place to improve its operating cash flow in subsequent years. Understanding these factors can help a franchisee assess the financial risks and opportunities associated with investing in a 1 800 Packouts franchise.