Margo Caribe, Inc. Announces Full Year 2022 and 1Q 2023 Results

JACKSONVILLE, Fla., June 1, 2023 /PRNewswire/ -- Margo Caribe, Inc. (OTC SYMBOL: MRGO) (Margo), a market leader in the home and garden segment, today announced operating results of its wholly-owned subsidiary, Margo Outdoor Living, Inc. for the year ended December 31, 2022 and the quarter ended March 31, 2023.

The Company reported audited results for the twelve-month fiscal year period ended December 31, 2022 that included net sales of $47.7 million, down 8.0 percent from the prior year and net income of approximately $4.4 million compared to $5.8 million for the prior year.  The Company also released unaudited results for the three-month period ended March 31, 2023, including net sales of $12.4 million, down 9.3% and pre-tax income of $2.6 million, declining 9.0% compared to the same period last year.

Michael Spector, CEO, commented that "sales for 2022 were impacted by a single customer electing to discontinue a test pebble program, accounting for 62 percent of the total year-over-year decline. Excluding this customer, total sales declined approximately 2.3 percent on a year-over-year basis, which is consistent with industry segment performance.  Sales to our large "big-box" customers continue to be impacted by high inventory levels and a slowdown in customer discretionary spending". 

Mr. Spector added, "our operating results will be positively impacted as sea freight rates return to pre-pandemic norms, lowering landed costs and improving product margins".  We continue to execute on our primary operating objective of expanding and diversifying our product offering and supplier distribution network. We see substantial growth opportunity in the pottery segment by leveraging newly secured production commitments from South American and European suppliers that will position us to effectively backfill gaps in inventory supply experienced by our customers post-pandemic".   

Highlights for the Year Ended December 31, 2022 and Quarter Ended March 31, 2023

• Revenue was $47.7 million for the twelve-month period ending December 31, 2022, down 8.0% from the same period in the prior year.
   
• The Company's longer-term sales growth profile remains strong, up 30% over 2019 pre-pandemic sales levels.
   
• Revenue for the three-month period ended March 31, 2023, totaled $12.4 million, down 9.3% from the same period last year.
   
• Full year 2022 net income was $4.4 million, down $1.1 million or 20 percent from the prior year, excluding the gain on PPP loan forgiveness in 2021.  Lower revenue was the primary cause for the year-over-year decline in income: operating expenses increased 8.0 percent or $627 thousand and gross margins improved by 62 basis points contributing approximately $300 thousand to pre-tax income. 
    
• Pre-tax income for the quarter ended March 31, 2023, totaled $2.6 million, down $264 thousand or 9 percent from the same period prior year. Lower sales caused the pre-tax decline as the Company posted a gross margin improvement of 2.8 percentage points with operating expense growth contained at 5.0 percent compared to the prior year. 
   
• Cash flow remained strong in 2022, cash balances ended the year at $5.4 million, up 18 percent from the prior year and debt at year-end totaled $5.1 million, down $2.0 million or 28% compared to prior year-end. 
   
• Cash balances ended March 31, 2023, at $5.6 million, $4.1 million higher than the same period last year.  Total debt ended the first quarter at $4.7 million, down 31 percent from the prior year. 
   
• The Company ended 2022 with access to approximately $10.7 million in liquidity consisting of $6.5 million in asset-based lending availability, based on advance rates on accounts receivable and inventory and $4.2 million in free cash.

Margo Outdoor Living, Inc.
Statements of Income
(A wholly-owned subsidiary of Margo Caribe, Inc.
Statements of Operations and Retained Earnings
In thousands except per share data		Twelve Months Ended			Three Months Ended
		December 31,			March 31,
		2022	2021		2023	2022
		Audited	Audited		Unaudited	Unaudited
Revenues
Distribution and eCommerce		$             43,166	$         47,085		$          10,812	$             12,430
Manufacturing		4,515	4,740		1,607	1,257
Total Revenue		47,681	51,825		12,419	13,686
Cost of Sales		33,004	36,191		7,372	8,502
Gross Profit(Loss)		14,677	15,634		5,047	5,185
Operating expenses		8,530	7,903		2,308	2,187
Income (Loss) from Operations		6,147	7,731		2,739	2,998
Interest income (expense)		(400)	(493)		(97)	(91)
Other expenses, net		16	337
Total Other Operating Expenses,Net		(384)	(156)		(97)	(91)
Income (Loss) Before Income Tax		5,764	7,575		2,643	2,907
Income Tax Benefit (Provision)		(1,352)	(1,696)		(643)	(651)
Net Income (Loss)		4,412	5,879		2,000	2,256
Earnings per common share		$                       1.10	$                   1.47		$                   0.50	$                      0.56

 

Margo Outdoor Living, Inc.
Condensed Balance Sheet
(A wholly-owned subsidiary of Margo Caribe, Inc.
Statements of Operations and Retained Earnings
In Thousands	December 31,			March 31,
	2022	2021		2023	2022
	Audited	Audited		Unaudited	Unaudited
Assets
Cash	$5,433	$4,618		$5,606	$1,506
Accounts receivable, net	$3,127	$3,950		$5,210	$9,557
Inventories, net	$5,854	$6,328		$6,289	$6,180
Note receivable	$139	$0		$139	$0
Prepaid expenses	$2,545	$1,742		$2,084	$3,159
Income tax receivable	$780	$118		$0	$576
Total Current Assets	$17,878	$16,756		$19,327	$20,978
Property and equipment, net	$7,447	$7,973		$7,202	$8,210
Right-of-Use Assets, operating leases	$14,114	$0		$13,451	$13,032
Total Assets	$39,438	$24,730		$39,980	$42,220
Liabilities and Stockholders' Equity
Accounts payable	$803	$1,055		$746	$1,126
Deferred tax liability	$466	$704		$466	$704
Accrued expenses	$416	$1,795		$224	$2,275
Revolving line-of-credit	$0	$0		$0	$2,144
Long-term Debt	$3,182	$4,940		$2,696	$4,632
Note payable to related parties	$1,963	$2,164		$1,963	$2,164
Operating lease liabilities	$15,575	$1,450		$14,852	$14,299
Total Liabilities	$22,405	$12,108		$20,947	$27,343
Total Stockholders' Equity	$17,033	$12,622		$19,034	$14,878
Total Liabilities and Stockholders' Equity	$39,438	$24,730		$39,980	$42,220

About Margo Caribe, Inc.

Margo Caribe, Inc. through its subsidiary Margo Outdoor Living, Inc. (MOL). has benefited by building key relationships with the largest big-box retailers in its industry segment. Its focus on product development, world-wide supplier sourcing, cost-effective logistics and state-of-the-art automation has contributed to its success in growing both top and bottom-line results. MOL offers a wide range of products in the lawn and garden segment. This includes sales of landscaping pebbles, mulch, glass, pottery and tile products. The Company's customer base is predominantly big-box retailers but also sells products directly to consumers through the eCommerce sales channel.

MOL is a wholly-owned subsidiary of Margo Caribe, Inc., a Puerto Rico entity. Effective December 22, 2020, MOL converted from a Florida corporation to a Delaware corporation and changed its name from Margo State Line, Inc. to Margo Outdoor Living, Inc.

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SOURCE Margo Caribe, Inc.