Margo Caribe, Inc. Announces Second Quarter 2022 Results

Rhea-AI Summary

Margo Caribe, Inc. (OTC SYMBOL: MRGO) reported its second quarter results for the period ending June 30, 2022. Net sales reached $16.7 million, a 22% increase from the previous quarter but 14% lower year-over-year. Pre-tax income stood at $3.0 million, with a net income of $2.3 million or $0.58 per share. CEO Michael Spector noted the sales decline was linked to a single customer, and overall margins faced pressure from rising labor and logistics costs. However, the company anticipates improvements as costs normalize. Cash flow remains robust with net debt at approximately $2.1 million, a 73% decrease from the prior quarter.

Positive

• Net sales increased 22% quarter-over-quarter.
• Sales growth profile up 43% compared to 2019 pre-pandemic levels.
• Strong cash flow with net debt of approximately $2.1 million, down 73% from the prior quarter.

Negative

• Net sales were 14% lower than the same quarter last year.
• Pre-tax income down 38% year-over-year despite lower operating expenses.

JACKSONVILLE, Fla., July 21, 2022 /PRNewswire/ -- Margo Caribe, Inc. (OTC SYMBOL: MRGO) (Margo), a market leader in the home and garden segment, today announced fourth quarter and full year operating results of its wholly-owned subsidiary, Margo Outdoor Living, Inc. for the quarter ended June 30, 2022.

Net sales for the second quarter ended June 30, 2022, totaled $16.7 million, up 22 percent from the prior quarter and 14 percent lower than second quarter of last year. The Company reported second quarter unaudited results including pre-tax income of approximately $3.0 million and net income of $2.3 million or $.58 per share.

"The year-over-year decline in sales can be specifically attributed to a single customer participating in a short-term transactional program, excluding this customer, total sales were down less than 1 percent compared to prior year. We believe our sales growth to be consistent with industry segment growth levels given the impact of inflation on discretionary sales for our big-box customer base and a natural pull-back from pandemic fueled ecommerce sales," said Michael Spector, CEO.

Mr. Spector added, "our operating margins remain under pressure from increasing labor costs, continuation of high sea freight rates and elevated diesel fuel prices. Looking forward, we expect to see margin improvement as logistics costs return to more historical norms, receptive pricing flexibility and further product diversification. We are encouraged with progress made to further broaden our product offering and diversify our geographic supplier distribution network. We see specific opportunities in expanding our pottery segment programs using South American and European suppliers with improved margins, more reliable and lower cost supply logistics."

Highlights for the Three Months Ended June 30, 2022

• Gross revenue was $16.7 million for the quarter, up 22% from the prior quarter and down 14% from the second quarter last year.
  
  
• The sales growth profile remains strong, up 43% over 2019 pre-pandemic sales levels.
  
  
• Pre-tax income of $3.0 million, was consistent with the prior quarter and 38% lower than the second quarter last year on 14% less sales. Product margins have compressed due to higher landed costs, but operating expenses have been managed to year-over- year growth of less than 2%.
  
  
• Cash flow remains strong, net debt (debt less cash), ended the quarter at approximately $2.1 million, down 73% from the prior quarter.

Statements of Operations: Period Ended June 30, In Thousands except per share data
	Three Months Ended			Six Months Ended
	Unaudited			Unaudited
	2022	2021		2022	2021
Revenue	$          16,725	$          19,392		$       30,411	$           33,348
Cost of Sales	11,276	12,151		19,849	20,913
Gross Margin	5,448	7,241		10,562	12,435
Operating Expense	2,347	2,217		4,359	4,189
Operating Income	3,101	5,023		6,203	8,246
Interest Expense Other Income / (Expense)	98 -	136 -		189 -	281 -
Pre-tax Income	3,003	4,888		6,014	7,965
Income Tax	673	1,095		1,347	1,784
Net Income	2,330	3,793		4,667	6,181
Net income per share	$0.58	$0.95		$1.17	$1.54

 

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 predominately 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.

FAQ

What were Margo Caribe's Q2 2022 net sales?

Margo Caribe reported net sales of $16.7 million for Q2 2022.

How does Margo Caribe's Q2 2022 performance compare to last year?

Net sales for Q2 2022 were 14% lower compared to the same quarter last year.

What was the net income for Margo Caribe in Q2 2022?

Margo Caribe's net income for Q2 2022 was $2.3 million, or $0.58 per share.

What factors affected Margo Caribe's margins in Q2 2022?

Operating margins were under pressure from increasing labor costs, high sea freight rates, and elevated diesel prices.

What is the net debt of Margo Caribe as of Q2 2022?

Margo Caribe's net debt ended at approximately $2.1 million, which is down 73% from the prior quarter.