Margo Caribe, Inc. Announces Third Quarter 2022 Results

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.

SOURCE Margo Caribe, Inc.