A little more on gross margins. Our gross margin improved 568 basis points compared to Q3 of 2022. The majority of this improvement came from now having a full quarter of the pricing actions in place from Q2, which counter the margin declines experienced in the prior year. We’ve also rationalized our shipping carriers, consolidating to a more favorable contract with FedEx and gained efficiencies in our warehouse operations, which both positively impacted our gross margin. Overall, we are encouraged by the margin improvement and the stable foundation it provides for future growth. With that, I’ll turn the mic over to Rich.
Richard Tang : Thank you, Brady, and hello, everyone. My name is Richard Tang, and I’ve been the CFO at IVFH for the past 2.5 years. I’ll touch on expenses and profit in my comments. In Q3, due to onetime actions, we saw SG&A increase by $162,000 over Q3 of last year, driven primarily by a quarterly revaluation of our COO’s stock appreciation rights planned, but partially offset by savings in office expenses. On a year-to-date basis, SG&A increased by $768,000, primarily from onetime severance expense of $1.9 million in Q1 of 2023. This was offset, to a large extent, by a decrease in marketing expense relative to our e-commerce business. As a reminder, from our last call, we’ve been highly focused on removing SG&A from the P&L where unnecessary.
But many of the changes we are making now have yet to fully flow through to the P&L. This will lead to nice tailwinds in the future. For instance, we have exited the lease for our Brooklyn office space. We cut travel expenses, renegotiated our contracts for insurance, legal services, investor relations and facility services. We have restructured several teams and significantly reduced labor at our e-commerce warehouse. We even cut our printing service expense by 90%. We are getting extremely deep into the weeds to understand how every dollar to the company is being spent and why. And personally, we’re viewing every single check that goes out the door before we process it. We still have a lot of opportunity on the SG&A front, and we’re committed to resetting the company’s cost structure to give us a profitable base to grow from.
Now to profit. Our Q3 GAAP net income came in at $134,000, a $124,000 improvement compared to Q3 2022. After 5 consecutive quarters of profit growth, this is the first quarter we’re lapping our progress, so we’re extremely proud to see significant continued progress on profit. Adjusted EBITDA swung from a profit of approximately $490,000 last year to an adjusted EBITDA profit of about $888,000 this year, almost doubling last year’s performance. This adjusted EBITDA amounts to 5.1% of revenue compared to 2.4% in Q3 of last year. On a per share basis, our adjusted EBITDA was $0.018 compared to $0.01 last year. This demonstrates how our focus up and down the P&L is helping us to create a sustainable business model. Regarding cash flow, you’ll notice that we did post the use of cash from operations in Q3.
This was due to a onetime shift of $500,000 in cash payments from 2 key customers that settled 2 days after the quarter and other changes in net working capital and ongoing payments to a prior executive that were previously discussed. On the balance sheet, we paid down the $2 million balance on our revolving line of credit, opening up access to our full line of $3 million. Our net working capital remained unchanged from last quarter at $4.6 million, a positive swing of $7.8 million from year-end 2022. We continue to be aggressive in driving down accounts receivable and streamlining our inventory procurement process and remain diligent in scrutinizing every payment that leaves each of our subsidiaries, looking for opportunities to renegotiate contracts and/or cut costs out altogether.
Lastly, I want to mention that we’ve revamped our Investor Relations site to be more intuitive and easier to navigate. Please check us out at ivfh.com. Thank you. Back to Bill.
