Massimo Group Reports Second Quarter 2024 Financial Results

Rhea-AI Summary

Massimo Group (NASDAQ: MAMO) reported strong Q2 2024 financial results, with revenue increasing 32% YoY to $35.4 million and net income rising 36% YoY to $2.8 million. The company's growth was driven by expanding production capabilities, new distribution partnerships, and product initiatives. Key highlights include:

- Gross profit increased 42% to $11.5 million, with gross margin improving to 32.5%
- EPS of $0.07 per basic and diluted share, up from $0.05 in Q2 2023
- Expansion of manufacturing facility by 90,000 sq. ft. and adoption of automated assembly robot line
- Strategic partnerships with Armlogi for logistics and new retail agreements with major chains
- Launch of new GKD 350 All-Terrain Go Kart
- Successful IPO raising $5.85 million and listing on Nasdaq Capital Market

Positive

• Revenue increased 32% YoY to $35.4 million in Q2 2024
• Net income rose 36% YoY to $2.8 million in Q2 2024
• Gross profit increased 42% to $11.5 million with gross margin improving to 32.5%
• EPS improved from $0.05 to $0.07 per share YoY
• Manufacturing facility expanded by 90,000 sq. ft. to support increased production
• New automated vehicle assembly robot line expected to improve efficiency by 50%
• Strategic partnership with Armlogi for improved logistics and order fulfillment
• New retail agreements with Tractor Supply, Fleet Farm, and a global omnichannel retailer
• Successful IPO raising $5.85 million and listing on Nasdaq Capital Market

Negative

• Revenue from pontoon boats decreased by 73.5% YoY to $1.2 million
• Slight decrease in gross margin for UTVs, ATVs, and e-bikes due to increased freight costs
• Net cash used by operating activities was $7.1 million, compared to net cash provided of $2.7 million in the previous year
• Increase in operating expenses by 36.2% to $7.9 million

Insights

Financial Analyst

Massimo Group's Q2 2024 results show strong growth, with revenue up 32% YoY to $35.4 million and net income increasing 36% to $2.8 million. The gross margin improvement of 217 bps to 32.5% is particularly noteworthy. However, the 73.5% decrease in pontoon boat sales due to dealer financing issues is a concern.

The company's strategic expansions in production and distribution are promising, especially the new automated assembly line and partnership with Armlogi. These initiatives should support future growth and potentially improve margins. The new retail partnerships with major chains like Tractor Supply and Fleet Farm could significantly boost sales.

While the overall financial picture is positive, investors should monitor the $7.1 million cash used in operations, which contrasts with $2.7 million provided last year. This change is attributed to inventory buildup and increased accounts receivable, which may be necessary for growth but could pressure liquidity if not managed carefully.

Market Research Analyst

Massimo's Q2 results reflect a strong position in the growing U.S. ATV and UTV market. The 53.3% increase in UTV, ATV and e-bike sales to $34.2 million indicates robust demand and effective market penetration. The shift towards in-store sales strategy appears successful, leading to larger volumes and fewer returns.

The expansion of retail partnerships, now reaching over 2,800 locations across 48 states, significantly enhances Massimo's market presence. The new agreements with major retailers like Fleet Farm and a global omnichannel retailer for youth products could open up new customer segments.

However, the sharp decline in pontoon boat sales due to dealer financing issues is a red flag. While consistent with industry trends, it highlights the importance of diversification in Massimo's product portfolio. The launch of new products like the GKD 350 All-Terrain Go Kart shows the company's commitment to innovation and market responsiveness, which is important in the competitive powersports industry.

Operations Management Expert

Massimo's operational initiatives are impressive and timely. The 90,000 sq. ft. expansion of their Garland, Texas facility and the introduction of an automated vehicle assembly robot line are significant steps towards increasing production capacity and efficiency. The expected 50% improvement in efficiency from automation could lead to substantial cost savings and improved margins in the long term.

The strategic partnership with Armlogi for warehousing and logistics is a smart move. By placing assembly and shipping closer to order destinations, Massimo can potentially reduce lead times and transportation costs, enhancing customer satisfaction and operational efficiency.

However, the increase in inventory ($5.0 million) and accounts receivable ($1.9 million) suggests a need for tighter working capital management. While this may be necessary to support growth, it's important to ensure that inventory turnover remains healthy and receivables are collected promptly to maintain strong cash flow.

Q2 2024 Revenue Increases 32% YoY to $35.4 Million

Q2 2024 Net Income Increases 36% YoY to $2.8 Million

New Production, Distribution and Product Initiatives Fueling Rapid Growth

GARLAND, Texas, Aug. 12, 2024 /PRNewswire/ -- Massimo Group (NASDAQ: MAMO) ("Massimo"), a manufacturer and distributor of powersports vehicles and pontoon boats, has reported its financial and operational results for the second quarter ended June 30, 2024.

Key Financial Q2 2024 and Subsequent Operational Highlights and Business Updates

($ millions)	Q2 Comparison
	Q2 2024	Q2 2023	$ Change YoY	% Change YoY
Revenue	$35.4	$26.7	$8.7	32 %
Gross Profit	$11.5	$8.1	$3.4	42 %
Gross Margin	32.5 %	30.3 %	--	217 bps
Net Income	$2.8	$2.1	$0.7	36 %

• Revenue increased 32% to $35.4 million in Q2 2024 compared to $26.7 million in Q2 2023.
• Gross profit increased 42% to $11.5 million in Q2 2024 from $8.1 million in Q2 2023. Gross margin increased 217 basis points to 32.5% in Q2 2024 from 30.3% in Q2 2023.
• Net income increased 36% to $2.8 million in Q2 2024, or $0.07 per basic and diluted share, as compared to net income of $2.1 million, or $0.05 per basic and diluted share, in Q2 2023.
• Announced the adoption of a new automated vehicle assembly robot line to be installed in the third calendar quarter at its 376,000 square foot factory in Garland, Texas to support production of its ATV and UTV vehicles lines.
• 90,000 sq. ft. expansion of its manufacturing facility in Garland, Texas, to support increased production across its motor and marine product verticals.
• Entered into strategic partnership agreement with Armlogi Holding Corp ("Armlogi"), a U.S.-based warehousing and logistics service provider, to provide access to Armlogi warehousing facilities and tailored logistics services for fast order fulfillment of UTVS, ATVs, Go-Karts and Golf Carts.
• Entered into an ongoing national agreement with a global omnichannel retailer for its youth series Mini Tractor and Mini 125 Go Karts to be sold in stores.
• Entered into an ongoing agreement with Fleet Farm, a retailer serving active, outdoor, suburban and farm communities in the Midwest U.S., for its UTV, ATV, and youth series product lines to be sold in stores.
• Launched new GKD 350 All-Terrain Go Kart, combining iconic styling with powerful performance in a rugged two-seater go-kart perfect for conquering any terrain.
• Exhibited Massimo Motor vehicles at the Outdoor Power Equipment Hoedown for Mid-States Distributing Company, Inc., held at the Gaylord Opryland in Nashville, TN.
• Closed $5.85 million initial public offering, listing on Nasdaq Capital Market under the ticker symbol "MAMO" on April 4, 2024.
• Company rang the closing bell at the Nasdaq MarketSite in Times Square, New York on Monday, July 15, 2024.

Management Commentary

"During the second quarter we focused on strategic expansions in production, distribution and products to support ongoing revenue momentum," said David Shan, Founder, Chairman & CEO. "With significant top and bottom-line growth on strong sales and margin improvement, we continue to build manufacturing capacity aimed at enhancing flexibility and increasing annual production. We continued to add new distribution partners and retailers to increase our national footprint and drive sales across our existing and new diversified product portfolio.

"Several production initiatives during the quarter are positioning us to further expand output levels each month. A new expansion has added 90,000 sq. ft. to our manufacturing facility in Garland, Texas to support increased production across motor and marine product verticals. At this facility we are also launching a new automated vehicle assembly robot line expected to be installed in the coming weeks. This automation is expected to improve efficiency by 50% and enhance safety for production of ATV and UTV vehicles lines.

"In addition to our facility expansion projects to accommodate growth initiatives, during the quarter we partnered with Armlogi, a U.S.-based warehousing and logistics service provider, to provide access to Armlogi warehousing facilities and tailored logistics services for fast order fulfillment of our UTVS, ATVs, Go-Karts and Golf Carts. Armlogi will receive containers of Massimo vehicle kits arriving from Asian suppliers at our warehouses in Savannah, GA, Edison, NJ, and Walnut, CA. We will provide vehicle assembly at the warehouses, and Armlogi will supply inventory management, storage services, logistics, and delivery to final order destinations. This partnership will enhance our operational capabilities and efficiencies by putting delivery of vehicle components, assembly and shipping closer to order destinations.

"In-store distribution channels also grew during the quarter with new agreements with Tractor Supply, Fleet Farm and a global omnichannel retailer. Building on the success of our current agreement with Tractor Supply providing our full Massimo Motor product lineup online and in stores.

We signed an ongoing national agreement with a global omnichannel retailer for the youth series Mini Tractor and Mini 125 Go Kart to be sold in stores. The retailer's online marketplace currently features over 100 Massimo products, and with the expanded partnership, the two products have been eligible to be stocked at over 1,300 stores in 13 states since May 2024. We also entered into an ongoing agreement with Fleet Farm for six UTV, ATV, and youth series products to be sold in stores and featured on the retailer's online marketplace. These national in-store opportunities with retailers position us for accelerating sales across the U.S.

"Looking ahead, our expanding production capabilities, including an automated vehicle assembly robot line and the Armlogi partnership, are expected to allow Massimo to meet the growing demand of our products. We believe with increased operating efficiencies we can further enhance margins while continuing to grow our revenue and expand our product line with new models and capabilities like our new GKD 350 All-Terrain Go Kart. We continue to focus on new distribution channels and additional products with existing partners, which now stands at over 2,800 retail locations promoting our brand in 48 states. Taken together, we are rapidly leveraging our position to build market share and deliver long-term value to our shareholders," concluded Mr. Shan.

Second Quarter 2024 Financial Results

For the three months ended June 30, 2024, revenues increased by $8.7 million, or 32.4%, to $35.4 million, compared to $26.7 million in the prior year period. The increase in revenue was primarily due to the combined effect of rising demand in the U.S. ATV and UTV market and a modified sales strategy.

Revenue from sales of UTVs, ATVs and e-bikes increased by $11.9 million, or 53.3%, from $22.3 million in the second quarter of fiscal 2023, to $34.2 million in the second quarter of fiscal 2024. The increase in revenue was attributable to the expansion into more large retail stores in the US and to a shift in sales strategy, focusing mostly on in-store sales, which generally involve larger volumes and fewer returns.

Revenue from sales of pontoon boats decreased by $3.2 million, or 73.5%, from $4.4 million in the second quarter of fiscal 2023, to $1.2 million in the second quarter of fiscal 2024. The decrease in revenue was primarily attributable to the fact that the company shifted from retailing to dealer sales starting in fiscal 2024 and the dealers have experienced high rejection rates at the floorplan financing providers such as Northpoint. This is consistent with the industry-wide trend.

Gross profit increased by $3.4 million, or 41.9%, from $8.1 million in the second quarter of fiscal 2023, to $11.5 million in the second quarter of fiscal 2024. Gross profit margin was 32.5% in the second quarter of fiscal 2024, compared with 30.3% in the same period last year. The increase in the gross profit margin was primarily attributable to higher net sales partly due to decreased return, which was partly offset by higher cost of sales due to increased freight costs in the second quarter of fiscal 2023 as compared to last year.

The cost of revenue on UTVs, ATVs and e-bikes increased by $8.2 million, or 55.7%, from $14.8 million in the second quarter of fiscal 2023 to $23.0 million in the second quarter of fiscal 2024, and the gross profit increased by $3.6 million, or 48.6%, from $7.6 million in the second quarter of fiscal 2023 to $11.2 million in the second quarter of fiscal 2024. The gross margin decreased by 1.1%, from 33.9% in the second quarter of fiscal 2023 to 32.8% in the second quarter of fiscal 2024. The increase in the cost of revenue was in line with the increase in sales. The slight decrease in gross margin was mainly due to a rise in global container freight in the second quarter of fiscal 2024. Freight costs increased in the second quarter of fiscal 2024 when compared with last year.

The cost of revenue on pontoon boats decreased by $3.0 million, or 76.5%, from $3.9 million in the second quarter of fiscal 2023 to $0.9 million in the second quarter of fiscal 2024, and the gross profit decreased by $0.3 million, or 51.6%, from $0.5 million in the second quarter of fiscal 2023 to $0.3 million in the second quarter of fiscal 2024. Gross margin increased from 12.3% in the second quarter of fiscal 2023 to 22.4% in the second quarter of fiscal 2024. The increase in gross margin was primarily because of strategically focusing on selling higher-margin models of pontoon boats.

Selling and marketing expenses increased by $0.6 million, or 24.6%, from $2.5 million in the second quarter of fiscal 2023 to $3.1 million in the second quarter of fiscal 2024. The increase in selling expenses was mainly due to an increase in shipping and handling fees.

General and administrative expenses increased by $0.8 million, or 22.7%, from $3.3 million in the second quarter of fiscal 2023 to $4.1 million in the second quarter of fiscal 2024. The increase was mainly due to increased salaries and benefits, a one-time impairment loss, and rent expense, which were partly offset by a decrease in professional and legal fees.

Total operating expenses increased 36.2% to $7.9 million for the three months ended June 30, 2024, compared to $5.8 million in the prior year second quarter.

Net income for the three months ended June 30, 2024, was $2.8 million, or $0.07 per basic and diluted share, as compared to net income of $2.1 million, or $0.05 per basic and diluted share, in the three months ended June 30, 2023.

Cash and cash equivalents totaled $1.3 million at June 30, 2024, as compared to $0.8 million at December 31, 2023. On April 24, 2024, Massimo closed its initial public offering with aggregate gross proceeds, before deducting underwriting discounts and commissions and other offering expenses payable by Massimo, of $5.85 million.

Net cash used by operating activities was $7.1 million for the six months ended June 30, 2024, compared to net cash provided of $2.7 million in the six months ended June 30, 2023, primarily due to increases in accounts receivable and inventory of $1.9 million and $5.0 million, respectively, and a decrease in accounts payable of $4.5 million. This is consistent with the company using part of the IPO proceeds as working capital to grow sales.

About Massimo Group

Massimo Group (NASDAQ: MAMO) is a manufacturer and distributor of powersports vehicles and pontoon boats. Founded in 2009, Massimo Motor believes it offers some of the most value packed UTV's, off-road, and on-road vehicles in the industry. The company's product lines include a wide selection of farm and ranch tested utility UTVs, recreational ATVs, and Americana style mini-bikes. Massimo Marine manufacturers and sells Pontoon and Tritoon boats with a dedication to innovative design, quality craftsmanship, and great customer service. Massimo is also developing electric versions of UTVs, golf-carts and pontoon boats. The company's 376,000 square foot factory is in the heart of the Dallas / Fort Worth area of Texas in the city of Garland. For more information, visit massimomotor.com, massimomarine.com and www.massimoelectric.com.

Forward-Looking Statements

This press release contains statements that constitute "forward-looking statements," including with respect to the initial public offering and the use of proceeds thereof. In some cases, you can identify forward-looking statements because they contain words such as "anticipate," "believe," "estimate," "expect," "intend," "may," "predict," "project," "target," "potential," "seek," "will," "would," "could," "should," "continue," "contemplate," "plan," and other words and terms of similar meaning. These forward-looking statements include information concerning statements regarding future cash needs, future operations, business plans and future financial results; and any other statements that are not historical facts. No assurance can be given that the proceeds of the offering will be used as indicated. Forward-looking statements are subject to numerous conditions, many of which are beyond the control of Massimo, including those set forth in the "Risk Factors" section of Massimo's Annual Report on Form 10-K for the fiscal year ended December 31, 2023 filed with the Securities and Exchange Commission (the "SEC"). Copies are available on the SEC's website, www.sec.gov. Massimo undertakes no obligation to update these statements for revisions or changes after the date of this release, except as required by law.

Company
Dr. Yunhao Chen
Chief Financial Officer
Massimo Group
ir@massimomotor.com

Investor Relations 
Chris Tyson 
Executive Vice President
MZ North America
Direct: 949-491-8235
MAMO@mzgroup.us

 

MASSIMO GROUP AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS
					As of
					June 30, 2024 (unaudited)					December 31, 2023 (audited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents					$	1,277,878				$	765,814
Accounts receivable, net						11,466,849					9,566,445
Inventories, net						30,831,548					25,800,912
Advance to suppliers						902,234					1,589,328
Other current assets						762,675					637,509
Total current assets						45,241,184					38,360,008
NON-CURRENT ASSETS
Property and equipment at cost, net						548,849					399,981
Right of use operating lease assets, net						3,492,910					1,478,221
Right of use financing lease assets, net						92,790					113,549
Deferred offering assets						-					1,457,119
Other non-current assets						49,500					-
Deferred tax assets						431,845					134,601
Total non-current assets						4,615,894					3,583,471
TOTAL ASSETS					$	49,857,078				$	41,943,479
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Short-term loans					$	2,668,762				$	303,583
Accounts payable						8,213,379					12,678,077
Other payable, accrued expenses and other current liabilities						70,601					98,097
Accrued return liabilities						202,273					283,276
Accrued warranty liabilities						732,565					619,113
Contract liabilities						1,205,431					1,835,411
Current portion of obligations under operating leases						908,584					847,368
Current portion of obligations under financing leases						42,524					41,647
Income tax payable						4,079,950					2,121,083
Total current liabilities						18,124,069					18,827,655
NON-CURRENT LIABILITIES
Obligations under operating leases, non-current						2,643,681					630,853
Obligations under financing leases, non-current						55,540					77,024
Loan from a shareholder						4,316,525					7,920,141
Total non-current liabilities						7,015,746					8,628,018
TOTAL LIABILITIES					$	25,139,815				$	27,455,673
Commitments and Contingencies
EQUITY
Common shares, $0.001 par value, 100,000,000 shares authorized, 41,322,485 and 40,000,000 issued and outstanding as of June 30, 2024 and December 31, 2023, respectively						41,322					40,000
Preferred shares, $0.01 par value, 5,000,000 preferred shares authorized, no shares were issued and outstanding as of June 30, 2024 and December 31, 2023, respectively						-					-
Subscription receivable						-					(832,159)
Additional paid-in-capital						5,392,664					1,994,000
Retained earnings						19,283,277					13,285,965
Total equity						24,717,263					14,487,806
TOTAL LIABILITIES AND EQUITY					$	49,857,078				$	41,943,479

 

MASSIMO GROUP AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME (UNAUDITED)
		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2024				2023				2024				2023
Revenues		$	35,402,653			$	26,735,699			$	65,554,330			$	45,576,114
Cost of revenues			23,903,396				18,633,003				43,603,686				31,856,424
Gross profit			11,499,257				8,102,696				21,950,644				13,719,690
Operating expenses:
Selling expense			3,097,362				2,486,454				5,307,846				4,436,739
General and administrative			4,094,737				3,337,493				8,201,642				6,321,755
Impairment loss on supplier deposit due to lawsuit			742,897				-				742,897				-
Research and development			-				-				162,250				-
Total operating expenses			7,934,996				5,823,947				14,414,635				10,758,494
Income from operations			3,564,261				2,278,749				7,536,009				2,961,196
Other income (expense):
Other income, net			132,268				26,973				379,837				71,868
Interest expense			(66,647)				(125,012)				(204,341)				(280,110)
Total other income (expense), net			65,621				(98,039)				175,496				(208,242)
Income before income taxes			3,629,882				2,180,710				7,711,505				2,752,954
Provision for income taxes			813,852				106,426				1,714,193				130,505
Net income and comprehensive income		$	2,816,030			$	2,074,284			$	5,997,312			$	2,622,449
Earnings per Share – basic and diluted		$	0.07			$	0.05			$	0.15			$	0.07
Weighted average shares outstanding – basic and diluted*			40,629,807				40,000,000				40,629,807				40,000,000

*	Retroactively restated for effect of reorganization

 

Pro Forma information Statement for Income Tax Provision For the Three Months and Six Months ended June 30, 2023 as a C Corporation upon Reorganization
Income before income taxes		$	2,180,710			$	2,752,954
Provision for income taxes			457,949				578,120
Net income and comprehensive income			1,722,761				2,174,834
Earnings per share – basic and diluted		$	0.04			$	0.05
Weighted average number of shares of common stock outstanding – basic and diluted			40,000,000				40,000,000

 

MASSIMO GROUP AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
		Six Months Ended June 30,
		2024				2023
Cash flows from operating activities:
Net income		$	5,997,312			$	2,622,449
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation			66,984				70,292
Non-cash operating lease expense			639,629				425,756
Accretion of finance lease liabilities			2,555				4,069
Amortization of finance lease right-of-use assets			20,759				21,353
Gain on disposal of fixed asset			(36,001)				-
Provision for expected credit loss, net			250,780				56,087
Impairment loss of advances to supplier due to lawsuit			742,897				-
Stock based compensation			230,266				-
Deferred tax assets			(297,244)				(12,101)
Changes in operating assets and liabilities:
Accounts receivable			(2,151,184)				(3,055,820)
Inventories			(5,030,636)				2,899,217
Advance to suppliers			(55,803)				(561,105)
Other assets			(174,666)				9,459
Related party payable			-				(20,000)
Accounts payables			(4,464,698)				(112,935)
Other payable, accrued expense and other current liabilities			(27,496)				19,578
Tax payable			1,958,867				78,606
Accrued warranty liabilities			113,452				294,242
Accrued return liabilities			(81,003)				25,768
Contract liabilities			(629,980)				399,447
Due to shareholder			(3,603,616)				-
Lease liabilities – operating lease			(580,274)				(425,755)
Net cash (used in) provided by operating activities			(7,109,100)				2,738,607
Cash flows from investing activities:
Proceed from sales of property and equipment			162,001				-
Acquisition of property and equipment			(341,852)				(24,661)
Net cash used in investing activities			(179,851)				(24,661)
Cash flows from financing activities:
Net proceeds from bank loan			2,668,762				(100,000)
Repayment of other loans			(303,583)				-
Repayment of finance lease liabilities			(23,162)				(23,886)
Proceed from common share issuances			80,000				-
Proceeds from initial public offering, net of share issuance costs			4,458,667				-
Due to shareholder			-				(2,626,164)
Proceeds from subscription deposits			920,331				20,000
Net cash provided by (used in) financing activities			7,801,015				(2,730,050)
Net increase (decrease) in cash and cash equivalents			512,064				(16,104)
Cash and cash equivalents, beginning of the period			765,814				947,971
Cash and cash equivalents, end of the period		$	1,277,878			$	931,867
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for interest		$	137,694			$	477,742
Cash paid for income taxes		$	52,570			$	64,000
NON-CASH ACTIVITIES
Right of use assets obtained in exchange for operating lease obligations		$	2,654,318			$	1,113,140
Right of use assets obtained in exchange for finance lease		$	-			$	60,805

 

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SOURCE Massimo Group

FAQ

What was Massimo Group's (MAMO) revenue in Q2 2024?

Massimo Group (MAMO) reported revenue of $35.4 million in Q2 2024, representing a 32% increase year-over-year.

How much did Massimo Group's (MAMO) net income grow in Q2 2024?

Massimo Group's (MAMO) net income increased by 36% year-over-year to $2.8 million in Q2 2024.

What was Massimo Group's (MAMO) earnings per share in Q2 2024?

Massimo Group (MAMO) reported earnings of $0.07 per basic and diluted share in Q2 2024, up from $0.05 in Q2 2023.

When did Massimo Group (MAMO) complete its initial public offering?

Massimo Group (MAMO) closed its initial public offering on April 24, 2024, raising $5.85 million in gross proceeds.

What new product did Massimo Group (MAMO) launch in Q2 2024?

Massimo Group (MAMO) launched the new GKD 350 All-Terrain Go Kart in Q2 2024.