Maison Solutions Reports Fiscal 2024 Second Quarter and Six-Month Financial Results

About this update from Maison Solutions Inc.

MONTEREY PARK, CA / ACCESSWIRE / December 18, 2023 / Maison Solutions Inc. ("Maison Solutions" or the "Company"), (Nasdaq:MSS), a fast-growing specialty grocery retailer offering traditional Asian food and merchandise to modern U.S. consumers, today announced financial results for the second quarter and first six months of fiscal 2024 ended October 31, 2023 . "Maison Solutions reached an important milestone in the Company's history with the completion of our IPO in October, and a subsequent private placement in November, better positioning Maison Solutions for future growth," said John Xu , President and Chief Executive Officer. "We plan to achieve this growth through a combination of organic expansion and strategic acquisitions, while working toward further improving efficiency throughout our organization. "We recently purchased a robust visualization display management software suite to help our stores reach their full potential by optimizing store design and set-up, including enhanced store layout and display, AI-driven decision making, task and process management, standardization across stores, remote inspection and management, training and staff efficiency, and inventory and SKU management," said Xu. "As a result, we expect to reduce the cost of operating and opening new stores under our HK Good Fortune brand, and, over the longer term, using the knowledge we gain from implementing the software to open new revenue streams by collaborating with other grocery and convenience stores to help them implement their own digital platforms using the software." Fiscal 2024 Second Quarter Financial Results Total revenues, net were $13.8 million for the fiscal 2024 second quarter, compared with $14.2 million for the prior-year quarter. The decrease mainly was due to competition from two newly opened Asian supermarkets near the Company's store in San Gabriel as well as reduction in online purchases as a result of customers returning to pre-pandemic shopping patterns and habits. Additionally, the Company generated slightly lower sales from perishable goods, which include meat, seafood, vegetables and fruit. Perishables revenues were $7.5 million for the fiscal 2024 second quarter, versus $7.9 million last year. Revenues for non-perishable goods, which include grocery, liquor, cigarettes, lottery, newspaper, reusable bags, non-food, and health products, of $6.3 million , were similar to the same period last year. Total cost of revenues, which includes rental expense, depreciation, the direct costs of purchased merchandise, shrinkage costs, store supplies, and inbound shipping costs, decreased 4.0 percent to $10.6 million for the fiscal 2024 second quarter, compared with $11.1 million for the same period last year. Gross profit for the fiscal 2024 second quarter was $3.1 million , up slightly from the same period last year. Gross margin improved 90 basis points to 22.7 percent, up from 21.8 percent for the fiscal 2023 second quarter. Operating income was $254,000 for the fiscal 2024 second quarter, compared with $649,000 for the fiscal 2023 second quarter. The reduction was primarily due to higher selling expenses related to an increase in payroll and utility costs. Net income attributable to Maison Solutions Inc. was $91,000 , or $0.01 per diluted share, for the second quarter of fiscal 2024, versus $529,000 , or $0.03 per diluted share, for the prior-year period. At October 31, 2023 , the Company had cash and equivalents of $8.6 million , up from $2.6 million at April 30, 2023 . Maison Solutions completed an initial public offering on October 10, 2023 , generating gross proceeds of $10.0 million . Net cash provided by operating activities was $476,000 for the six months ended October 31, 2023 , compared with net cash used in operating activities of $1.1 million for the same period last year. Six-Month Fiscal Year 2024 Financial Results Total revenues, net rose 7.6% to $27.5 million for the first six months of fiscal 2024, up from $25.6 million for the prior-year period. The increase mainly was due to the acquisition of Maison Monterey Park in July 2022 , partially offset by decreased sales at three of the Company's other stores. Perishable goods revenues increased to $15.2 million , up from $14.4 million for the first six months of fiscal 2023. Non-perishable goods revenues improved to $12.3 million , from $11.2 million for the first six months of fiscal 2023. Total cost of revenues were $21.3 million for the fiscal 2024 first half, compared with $20.2 million for the same period last year. Gross profit for the first six months of fiscal 2024 was $6.3 million , up from $5.4 million for the same period last year. Gross margin improved 157 basis points to 22.6 percent, up from 21.1 percent for the first six months of fiscal 2023. Operating income was $37,000 for the fiscal 2024 first half, compared with $128,000 for the fiscal 2023 first half. The reduction was principally related to an increase in selling expenses, including payroll and store operating costs, as well as higher general and administrative expenses, mainly due to professional fees related to the Company's IPO. Net loss attributable to Maison Solutions Inc. was $13,000 , or a loss of $0.00 per diluted share, for the first six months of fiscal 2024, versus a loss of $68,000 , or a loss of $0.00 per diluted share, for the prior-year period. About Maison Solutions Inc. Maison Solutions Inc. is a fast-growing specialty grocery retailer offering traditional Asian food and merchandise to modern U.S. consumers, particularly to members of Asian-American communities. The Company is committed to providing Asian fresh produce, meat, seafood, and other daily necessities in a manner that caters to traditional Asian-American family values and cultural norms, while also accounting for the new and faster-paced lifestyle of younger generations and the diverse makeup of the communities in which the Company operates. Since its formation in 2019, the Company has acquired equity interests in four traditional Asian supermarkets in the Los Angeles area, and has been operating them under the brand name HK Good Fortune. To learn more about Maison Solutions, please visit the Company's website at www.maisonsolutionsinc.com . Cautionary Note Concerning Forward-Looking Statements This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, including the Company's ability to grow organically and through acquisitions, improve efficiencies throughout the organization, reduce costs related to operating and opening new stores, and, over the longer term, use knowledge gained from implementing the software to open new revenue streams. No assurance can be given that the proceeds will be used as indicated. Forward-looking statements are subject to numerous conditions, many of which are beyond the control of the Company, including those set forth in the Risk Factors section of the Company's registration statement for the initial public offering filed with the SEC . Copies are available on the SEC's website at www.sec.gov . Maison Solutions undertakes no obligation to update these statements for revisions or changes after the date of this release, except as required by law. Investor Relations and Media Contact: PondelWilkinson Inc. Judy Lin or Laurie Berman 310-279-5980 [email protected] (financial tables follow) MAISON SOLUTIONS INC. CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) Three Months Ended October 31 , Six Months Ended October 31 , 2023 2022 2023 2022 Net Revenues Supermarket $ 13,766,204 $ 14,168,472 $ 27,518,519 $ 25,578,160 Total Revenues, Net 13,766,204 14,168,472 27,518,519 25,578,160 Cost of Revenues Supermarket 10,642,983 11,083,992 21,289,202 20,188,831 Total Cost of Revenues 10,642,983 11,083,992 21,289,202 20,188,831 Gross Profit 3,123,221 3,084,480 6,229,317 5,389,329 Selling Expenses 2,281,147 1,837,816 4,545,697 4,006,034 General and Administrative Expenses 588,251 597,221 1,646,542 1,254,849 Total Operating Expenses 2,869,398 2,435,037 6,192,239 5,260,883 Income from Operations 253,823 649,443 37,078 128,446 Other Income, net (898 ) 43,668 383,051 43,792 Investment (Loss) Income 15,678 - (12,778 ) - Interest Expense (29,965 ) (28,759 ) (76,531 ) (60,347 ) Total Other Income (Expenses), net (15,185 ) 14,909 293,742 (16,555 ) Income Before Income Taxes 238,638 664,352 330,820 111,891 Income Tax Provisions 147,160 72,155 266,066 90,081 Net Income 91,478 592,197 64,754 21,810 Net Income Attributable to Noncontrolling Interests 13 63,005 78,228 89,658 Net (Loss) Income Attributable to Maison Solutions Inc. $ 91,465 $ 529,192 $ (13,474 ) $ (67,848 ) (Loss) Income per Share Attributable to Maison Solutions, Inc. - Basic and Diluted $ 0.01 $ 0.03 $ (0.00 ) $ (0.00 ) Weighted Average Number of Common Stock Outstanding - Basic and Diluted 16,780,220 16,000,000 16,298,913 16,000,000 MAISON SOLUTIONS INC. CONSOLIDATED BALANCE SHEETS October 31 , 2023 (Unaudited) April 30 , 2023 ASSETS Current Assets Cash and equivalents $ 8,601,347 $ 2,569,766 Accounts receivable 554,517 315,356 Accounts receivable - related parties 160,876 289,615 Inventories, net 2,826,956 2,978,986 Prepayments 1,685,550 1,547,243 Other receivables and other current assets 387,813 550,836 Other receivable - related parties 33,995 33,995 Total Current Assets 14,251,054 8,285,797 Restricted cash - non-current 1,101 1,101 Property and equipment, net 570,027 671,463 Intangible assets 1,690,279 197,329 Security deposits 457,491 457,491 Investment under cost method - related parties 203,440 203,440 Investment under equity method 1,427,222 - Operating lease right-of-use assets, net 21,523,046 22,545,190 Goodwill 2,222,211 2,222,211 Total Assets $ 42,345,871 $ 34,584,022 LIABILITIES AND STOCKHOLDERS' DEFICIT Current Liabilities Accounts payable $ 2,955,910 $ 3,105,592 Accounts payable - related parties 465,375 465,310 Note payable 150,000 150,000 Current portion of loan payables 201,165 370,828 Accrued expenses and other payables 955,779 867,796 Contract liabilities 317,155 449,334 Other payables - related parties 241,585 241,585 Operating lease liabilities - current 1,815,206 1,761,182 Income taxes payable 1,208,539 961,034 Total Current Liabilities 8,310,714 8,372,661 Long-term loan payables 2,529,014 2,561,299 Other long-term payables 111,314 105,637 Operating lease liabilities - non-current 21,784,685 22,711,760 Deferred tax liability, net 36,741 40,408 Total Liabilities 32,772,468 33,791,765 Stockholders' Equity Class A Common stock, $0.0001 par value, 92,000,000 shares authorized; 16,260,000 and 13,760,000 shares issued and outstanding at October 31, 2023 and April 30, 2023 , respectively 1,626 1,376 Class B Common stock, $0.0001 par value, 3,000,000 shares authorized; 2,240,000 shares issued and outstanding 224 224 Additional paid in capital 8,716,142 - Retained earnings 509,236 522,710 Total Maison Solutions, Inc. Stockholders' Equity 9,227,228 524,310 Noncontrolling interests 346,175 267,947 Total Stockholders' Equity 9,573,403 792,257 Total Liabilities and Stockholders' Equity $ 42,345,871 $ 34,584,022 MAISON SOLUTIONS INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Six Months ended October 31 , 2023 2022 Cash flows from operating activities Net income $ 64,754 $ 21,810 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization expenses 127,451 244,848 Bad debt reversal (105,322 ) - Provision for inventory shrinkage reserve (3,559 ) 95,821 Investment loss 12,778 - Changes in deferred taxes (3,667 ) (18,511 ) Changes in operating assets and liabilities: Accounts receivable (239,161 ) (629,515 ) Accounts receivable - related party 129,105 213,125 Inventories 155,589 (489,928 ) Prepayments (138,307 ) 683,543 Other receivables and other current assets 268,343 (251,374 ) Accounts payable (149,679 ) (116,322 ) Accounts payable - related party (301 ) (432,360 ) Accrued expenses and other payables 87,983 (494,035 ) Contract Liabilities (132,180 ) (106,202 ) Operating lease liabilities 149,093 100,470 Taxes payables 247,505 104,120 Other long-term payables 5,677 18,368 Net cash provided by (used in) operating activities 476,102 (1,056,142 ) Cash flows from investing activities Payment for acquisition of subsidiary - (2,500,000 ) Payments of equipment purchase (18,965 ) (12,500 ) Payments of intangible assets purchase (1,500,000 ) - Loans repaid from third parties - 3,977,134 Investment into Good Fortune Arcadia (1,440,000 ) - Net cash (used in) provided by investing activities (2,958,965 ) 1,464,634 Cash flows from financing activities Bank overdraft - (281,941 ) Repayments on loan payables (201,948 ) (177,526 ) Repayments to related parties - (62,932 ) Borrowings from related parties - 526,268 Net proceeds from issuance of common stock - IPO 8,716,392 - Net cash provided by financing activities 8,514,444 3,869 Net changes in cash and restricted cash 6,031,581 412,361 Cash and restricted cash at the beginning of the period 2,570,867 972,431 Cash and restricted cash at the end of the period $ 8,602,448 $ 1,384,792 Supplemental disclosure of cash and restricted cash Cash $ 8,601,347 $ 1,383,691 Restricted cash 1,101 1,101 Total cash and restricted cash $ 8,602,448 $ 1,384,792 Supplemental disclosure of cash flow information Cash paid for interest $ 63,683 $ 14,357 Cash paid for income taxes $ 22,228 $ 800 SOURCE: Maison Solutions, Inc. 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