Massimo Group reports revenue bump in Q1
Massimo Group, a manufacturer and distributor of powersports vehicles and pontoon boats, has reported its financial and operational results for the first quarter ended March 31, 2024.
“The first quarter of 2024 was highlighted by our successful IPO and Nasdaq listing, along with substantial top and bottom line growth on strong sales and margin improvement for our diversified and comprehensive product portfolio,” says David Shan, founder, chairman and CEO of Massimo Group. “Our production crew is able to produce over 3,000 vehicles each month, a significant jump from previous output levels. This surge in manufacturing is expected to allow Massimo to meet growing demand while paving the way for exciting new developments.”
Massimo entered into new partnership agreements highlighting its in-store distribution channel expansion efforts with major retailers.
“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 will now be eligible to be stocked at over 1,300 stores in 13 states beginning in May. The addition of this first national in-store opportunity with this global retailer represents a significant milestone for our company, and we are well-positioned to accelerate robust sales growth with the retailer. We believe we can continue adding vehicles to the in-store program with successful sales.”
David Shan, founder, chairman and CEO of Massimo Group
The company also entered into an agreement with Fleet Farm to sell six UTV, ATV, and youth series products in stores and feature them on the retailer’s online marketplace.
“Our focus on distribution channel expansion has resulted in over 2,800 retail locations promoting our brand in 48 states where our products are distributed and will continue to drive sales across our full motor product line of Massimo vehicles,” says Shan.
“Looking ahead, with increased participation in outdoor activities and higher utilization of utility vehicles in ranch and farm work, demand for UTVs and ATVs in the U.S, we believe we are well positioned for continued market penetration in this high-growth category with our full suite of consumer motor 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,” Shan concludes.
First Quarter 2024 Results
For Q1 2024, revenues increased by $11.3 million, or 60.0%, to $30.2 million, compared to $18.8 million in the prior year period. The first quarter increase in revenue was driven by its expansion at major chain stores and its dealer network.
Revenue from sales of UTVs, ATVs and electric bikes increased by $12.2 million, or 74.1%, from $16.5 million in Q1 2023 to $28.7 million in Q1 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 $0.9 million, or 38.2%, from $2.4 million in Q1 2023, to $1.5 million in Q1 2024. The decrease in revenue was due to a shift from retailing in Q1 2023 to dealer sales in Q1 2024, and the dealers have experienced more difficulty amid the current high-interest rate environment obtaining floorplan financing for customers from providers such as Northpoint. This is consistent with industry-wide trends.
Gross profit increased by $4.8 million, or 86.1%, from $5.6 million in Q1 2023, to $10.5 million in Q1 2024. Gross profit margin was 34.7% in Q1 2024, as compared with 29.8% in the prior year quarter. The increase in the gross profit margin was primarily attributable to higher net sales partly due to decreased returns and the lower cost of sales due to reduced freight costs in the first quarter of 2024 compared to the previous year.
The cost of revenue on UTVs, ATVs and electric bikes increased by $7.2 million, or 63.7%, from $11.3 million in Q1 2023 to $18.5 million in Q1 2024. And gross profit increased by $5.0 million, or 96.7%, from $5.2 million in Q1 2023 to $10.2 million in Q1 2024. Gross profit margin increased by 4.1%, from 31.6% in Q1 2023 to 35.7% in Q1 2024. The company says the increased cost of revenue was in line with the increase in sales. The increase in gross profit margin was mainly due to a significant decline in global container freight compared to last year.
Cost of revenue on pontoon boats decreased by $0.7 million, or 36.4%, from $1.9 million from Q1 2023 to $1.2 million in Q1 2024, and gross profit decreased by $0.2 million, or 46.7%, from $0.4 million in Q1 2023 to $0.2 million in Q1 2024. Gross profit margin decreased by 2.4%, from 17.6% in Q1 2023 to 15.2% in Q1 2024.
Selling and marketing expenses increased by $0.3 million, or 13.3%, from $2.0 million in Q1 2023 to $2.2 million in Q1 2024. The company explains that this is consistent with the fact that the chargebacks from new big-box customers have increased due to increased sales.
General and administrative expenses increased by $1.1 million, or 37.2%, from $3.0 million in Q1 2023 to $4.1 million in Q1 2024. The increase was mainly due to increased rent expense and professional fees.
Total operating expenses increased 31.1% to $6.5 million for Q1 2024, compared to $4.9 million in the prior year first quarter.
Net income for Q1 2024, was $3.2 million, or $0.08 per basic and diluted share, as compared to net income of $0.5 million, or $0.01 per basic and diluted share, in Q1 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 $0.6 million for Q1 2024, compared to cash provided of $0.8 million in Q1 2023, primarily due to increased accounts receivable and inventory.
