Margo Caribe, Inc. Announces Third Quarter 2022 Results

Rhea-AI Summary

Margo Caribe, Inc. (MRGO) reported a 5% decline in net sales for Q3 2022, totaling $10.2 million, with a year-to-date decrease of 8% to $40.6 million. Pre-tax income was approximately $299,000 for the quarter and $6.4 million year-to-date, down 30% from the previous year. CEO Michael Spector noted that sales were affected by a major customer discontinuing a program, alongside economic pressures on spending. Despite challenges, e-commerce sales surged 75% year-to-date, and reduced freight costs are expected to improve margins moving forward.

Positive

• E-commerce sales increased by 75% year-to-date.
• Sales growth is up 86% compared to pre-pandemic levels.
• Expected relief in operating margins as sea freight rates decrease by 60% since the end of 2021.

Negative

• Net sales decreased by 5% in Q3 2022 compared to Q3 2021.
• Year-to-date net sales are down 8% from the previous year.
• Pre-tax income dropped by 30% year-to-date, from $9.1 million to $6.4 million.

JACKSONVILLE, Fla., Oct. 31, 2022 /PRNewswire/ -- Margo Caribe, Inc. (OTC SYMBOL: MRGO) (Margo), a market leader in the home and garden segment, today announced third quarter operating results of its wholly-owned subsidiary, Margo Outdoor Living, Inc. for the quarter ended September 30, 2022.

Net sales for the third quarter ended September 30, 2022, totaled $10.2 million, down 5 percent from the third quarter last year. Year-to-date net sales for the period ended September 30, 2022, totaled $40.6 million, 8 percent lower than the same period last year. The Company reported unaudited results including pre-tax income of approximately $299 thousand for the third quarter and $6.4 million for the nine-month period ended September 2022.

Michael Spector, CEO, commenting on sales trends: "the decline in year-over-year sales can be primarily attributed to a single customer choosing to discontinue a transactional program initiated in 2021. Excluding this customer, total sales declined approximately 2.5 percent on a year-to-date basis, which is more in line with our industry segment averages. Sales to our large "big-box" customers have been impacted by their carrying of higher-than-normal inventory and the impact current economic conditions have had on discretionary spending".

Mr. Spector added, "our operating margins this year were impacted by higher labor costs, a historic spike in sea freight rates and elevated diesel fuel prices. Looking forward, we expect immediate relief from recent margin compression as sea freight rates continue to trend towards historical averages; current Asian freight quotes are down approximately 60 percent since the end of 2021. We see definitive progress being made in broadening our product offering and diversifying our geographic supplier distribution network. Specifically, sales growth opportunities exist for expanding our pottery segment sales using South American and European suppliers, our pebble tile segment and building on the success of our own e­-commerce sales, up 75 percent year-to-date, primarily targeting the pro-business component of our industry segment."

Highlights for the Third Quarter Ended September 30. 2022

• Net sales were $10.2 million for the quarter, down 39% from the prior quarter and 4.8% from the third quarter last year.
• The sales growth profile remains strong, up 86% over 2019 pre-pandemic sales levels.

Margo Caribe, Inc. Announces Third Quarter 2022 Operating Results

• Year-to-date pre-tax income was $6.4 million, down $2.7 million or 30 percent from the prior year on gross sales decline of $3.8 million or 7.7 percent. In addition to the decline in sales, product margin compression due primarily to higher landed inventory costs, and higher rent, insurance, and fuel costs were the primary contributors to the lower pre-tax result.
• Cash flow remains strong, cash balances ended the third quarter $324 thousand higher than total debt, a $2.4 million improvement from the prior quarter and $8.3 million better than the first quarter 2022.

 

Statements of Operations: Period Ended September 30, In Thousands except per share data
	Three Months Ended			Nine Months Ended
	Unaudited			Unaudited
	2022	2021		2022		2021
Revenue	$ 10,156	$ 10,674		$ 40,567		$ 44,022
Cost of Sales	7,447	7,679		27,295		28,591
Gross Margin	2,709	2,996		13,272		15,431
Operating Expense	2,114	2,056		6,400		6,237
Operating Income	595	940		6,872			9,194
Interest Expense	296	122		485		404
Other Income I (Expense)	-	337		-		337
Pre-tax Income	299	1,154		6,387		9,127
Income Tax	67	259		1,431		2,044
Net Income	232	895		4,956		7,083
Net income per share	$0.06	$0.22		$1.24		$1.77

 

Margo Caribe, Inc. Announces Third Quarter 2022 Operating Results

Condensed Consolidated Balance Sheets
	September 30,	September 30,	December 31,
In Thousands	2022	2021	2021
	Unaudited	Unaudited	Audited
Assets
Cash	$6,349	$6,660	$4,618
Accounts receivable, net	$4,638	$4,969	$3,950
Inventories, net	$5,368	$4,750	$6,328
Prepaid expenses	$1,744	$2,621	$1,742
Total Current Assets	$18,098	$18,999	$16,638
Property and equipment, net	$7,900	$8,320	$7,973
Total Assets	$25,999	$27,319	$24,612
liabilities and Stockholders' Equity
Accounts payable	$544	$976	$1,055
Deferred tax liability	$704	$684	$704
Revolving line-of-credit	$0	$81	$0
Long-term Debt	$3,666	$5,792	$4,742
Note payable to and advance from related parties	$2,040	$2,086	$2,040
Deferred Rent	$1,696	$1,336	$1,450
Other liabilities	-$172	$2,545	$1,999
Total Liabilities	$8,477	$13,500	$11,990
Stockholders' Equity
Common stock, S0.01 par value; 10 million shares
authorized,1,000 issued and outstanding; Preferred
1.1M authorized, none issued or outstanding and S0.01 par value	$0	$0	$0
Additional paid-in capital	$4,650	$4,650	$4,650
Retained earnings	$12,871	$9,169	$7,972
Total Stockholders' Equity	$17,521	$13,819	$12,622
Total Liabilities and Stockholders' Equity	$25,999	$27,319	$24,612

 

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.

FAQ

What are Margo Caribe's Q3 2022 revenue figures?

Margo Caribe reported net sales of $10.2 million for Q3 2022.

How did Margo Caribe's year-to-date sales performance compare to last year?

Year-to-date sales decreased by 8%, totaling $40.6 million compared to the previous year.

What factors contributed to the decline in Margo Caribe's sales?

The decline was primarily due to a major customer discontinuing a program and economic pressures affecting discretionary spending.

What was Margo Caribe's net income for Q3 2022?

Margo Caribe reported a pre-tax income of approximately $299,000 for Q3 2022.

How are Margo Caribe's e-commerce sales performing?

E-commerce sales surged by 75% year-to-date, highlighting a strong growth opportunity.