Maison Solutions Reports Fiscal 2024 Third Quarter and Nine-Month Financial Results

About this update from Maison Solutions Inc.

MONTEREY PARK, CA / ACCESSWIRE / March 18, 2024 / Maison Solutions Inc. ("Maison Solutions" or the "Company"), (Nasdaq:MSS), a U.S. -based specialty grocery retailer offering traditional Asian food and merchandise to modern consumers, today announced financial results for the third quarter and first nine months of fiscal 2024 ended January 31, 2024 . "We continue to make considerable operational progress through store renovations, new store openings, and acquisitions of additional stores to efficiently grow our footprint," said John Xu , President and Chief Executive Officer of Maison Solutions. "Our El Monte store, which is the first of our planned store renovations, is on track to be completed later this month, and will provide a vibrant, contemporary shopping experience for customers, while leveraging our recently purchased software suite to drive revenues through optimization of store design, layout and shelf displays. Additionally, we remain on schedule to open our flagship, 37,000 square-foot, store in Rowland Heights, California later this year, which we believe will become one of the largest and most advanced Asian grocery supercenters in the state. Fiscal 2024 Third Quarter Financial Results Total revenues, net, were $13.6 million for the fiscal 2024 third quarter, compared with $15.6 million for the prior-year quarter. Results primarily reflected competition from two newly opened Asian supermarkets near the Company's San Gabriel store, the end of certain COVID-19 customer relief programs, and a temporary slow-down at the Company's El Monte store during its renovation. Revenue for perishable goods, which include meat, seafood, vegetables and fruit, were $7.2 million for the fiscal 2024 third quarter, versus $8.7 million for the same period last year. Revenues for non-perishable goods, which include grocery, liquor, cigarettes, lottery tickets, newspapers, reusable bags, non-food, and health products, were $6.4 million for the fiscal 2024 third quarter, compared with $6.9 million for last year's fiscal third quarter. Total cost of revenues, which includes rental expense, depreciation, the direct costs of purchased merchandise, shrinkage costs, store supplies, and inbound shipping costs, decreased 10.5 percent to $10.4 million for the fiscal 2024 third quarter, from $11.6 million for fiscal 2023 third quarter. The decline primarily is related to lower sales and reduced freight costs. Gross profit for the fiscal 2024 third quarter equaled $3.2 million , compared with $4.0 million from the same period last year. Gross margin was 23.4 percent, versus 25.6 percent for the same quarter last year. Operating loss was approximately $307,000 for the fiscal 2024 third quarter, compared with a loss of approximately $48,000 for the fiscal 2023 third quarter. The change mainly was due to the revenue and gross profit declines. Net loss attributable to Maison Solutions was approximately $549,000 , or a loss of $0.03 per share, for the third quarter of fiscal 2024, versus net income attributable to Maison Solutions of approximately $988,000 , or $0.06 per fully diluted share, for the prior-year period. Contributing to the net loss in the fiscal 2024 third quarter was a reduction in "other income," primarily due to $1.3 million in employee retention credits received by the Company related to the COVID-19 pandemic in last year's fiscal third quarter that was not repeated in the fiscal 2024 period. At January 31, 2024 , the Company had cash and equivalents of $9.4 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 approximately $10.0 million , before underwriting discounts and commissions. On November 22, 2023 , the Company completed a private placement, generating gross proceeds of approximately $5 million , before deducting offering expenses. Net cash used in operating activities was approximately $887,000 for the nine months ended January 31, 2024 , compared with net cash provided by operating activities of approximately $364,000 for the similar period last year. Nine-Month Fiscal Year 2024 Financial Results Total revenues, net, were $41.1 million for the first nine months of fiscal 2024, approximately the same as for the first nine months of fiscal 2023. Perishable goods revenues were $22.4 million , versus $23.1 million for the first nine months of the last fiscal year. Non-perishable goods revenues were $18.7 million , versus $18.1 million for the first nine months of fiscal 2023. Total cost of revenues were $31.7 million for the fiscal 2024 year-to-date period, compared with $31.8 million for the prior-year period. Gross profit was $9.4 million for the first nine months of fiscal 2024 and fiscal 2023. Gross margin improved by 10 basis points to 22.9 percent, from 22.8 percent for the first nine months of fiscal 2023. Operating loss was approximately $270,000 for the fiscal 2024 nine-month period, compared with operating income of approximately $80,000 for the same period in fiscal 2023. The change was principally related to higher selling and general and administrative expenses. Net loss attributable to Maison Solutions was approximately $562,000 , or a loss of $0.03 per share, for the first nine months of fiscal 2024, versus net income attributable to Maison Solutions of approximately $921,000 , or $0.06 per fully diluted share, for the prior-year period. About Maison Solutions Inc. Maison Solutions Inc. is a U.S. -based specialty grocery retailer offering traditional Asian food and merchandise to 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 . Follow the Company on LinkedIn and X . 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 January 31 , Nine Months Ended January 31 , 2024 2023 2024 2023 Net Revenues Supermarket $ 13,598,479 $ 15,637,095 $ 41,116,998 $ 41,215,255 Total Revenues, Net 13,598,479 15,637,095 41,116,998 41,215,255 Cost of Revenues Supermarket 10,410,684 11,626,723 31,699,886 31,815,554 Total Cost of Revenues 10,410,684 11,626,723 31,699,886 31,815,554 Gross Profit 3,187,795 4,010,372 9,417,112 9,399,701 Selling Expenses 2,438,846 2,664,054 6,984,543 6,670,088 General and Administrative Expenses 1,056,118 1,394,570 2,702,660 2,649,419 Total Operating Expenses 3,494,964 4,058,624 9,687,203 9,319,507 (Loss) Income from Operations (307,169 ) (48,252 ) (270,091 ) 80,194 Other Income, Net 898 1,277,741 383,949 1,321,533 Investment Loss from Equity Method Investment (51,204 ) - (63,982 ) - Interest Expense (Income), Net (19,425 ) 76,052 (95,956 ) 15,705 Total Other Income (Expenses), Net (69,731 ) 1,353,793 224,011 1,337,238 Loss (Income) Before Income Taxes (376,900 ) 1,305,541 (46,080 ) 1,417,432 Income Tax Provisions 158,656 99,070 424,722 189,151 Net (Loss) Income (535,556 ) 1,206,471 (470,802 ) 1,228,281 Net Income Attributable to Noncontrolling Interests 13,398 217,997 91,626 307,655 Net (Loss) Income Attributable to Maison Solutions Inc. $ (548,954 ) 988,474 $ (562,428 ) $ 920,626 (Loss) Income per Share Attributable to Maison Solutions, Inc. - Basic $ (0.03 ) $ 0.06 (0.03 ) $ 0.06 - Diluted $ (0.03 ) $ 0.06 (0.03 ) $ 0.06 Weighted Average Number of Common Stock Outstanding - Basic 19,405,797 16,000,000 17,334,541 16,000,000 - Diluted 19,435,915 16,000,000 17,347,630 16,000,000 MAISON SOLUTIONS INC. CONSOLIDATED BALANCE SHEETS January 31, 2024 (Unaudited) April 30, 2023 ASSETS Current Assets Cash and cash equivalents $ 9,406,626 $ 2,569,766 Accounts receivable 756,341 315,356 Accounts receivable - related parties 407,446 289,615 Inventories, net 3,020,220 2,978,986 Prepayments 20,000 1,547,243 Other receivables and other current assets 993,976 550,836 Other receivable - related parties 33,995 33,995 Total Current Assets 14,638,604 8,285,797 Restricted cash - non-current 1,101 1,101 Property and equipment, net 789,937 671,463 Intangible assets 3,071,463 197,329 Security deposits 457,491 457,491 Investment under cost method 75,000 - Investment under cost method - related parties 203,440 203,440 Investment under equity method 1,736,018 - Operating lease right-of-use assets, net 21,004,764 22,545,190 Goodwill 2,222,211 2,222,211 Total Assets $ 44,200,029 $ 34,584,022 LIABILITIES AND STOCKHOLDERS' DEFICIT Current Liabilities Accounts payable $ 1,654,221 $ 3,105,592 Accounts payable - related parties 492,480 465,310 Note payable - 150,000 Current portion of loan payables 121,942 370,828 Accrued expenses and other payables 858,342 867,796 Contract liabilities 308,326 449,334 Other payables - related parties 241,585 241,585 Operating lease liabilities - current 1,850,310 1,761,182 Income taxes payable 1,069,281 961,034 Total Current Liabilities 6,596,487 8,372,661 Long-term loan payables 2,512,674 2,561,299 Security deposit from sub-tenants 111,314 105,637 Operating lease liabilities - non-current 21,309,934 22,711,760 Deferred tax liability, net 34,273 40,408 Total Liabilities 30,564,682 33,791,765 Stockholders' Equity Class A Common stock, $0.0001 par value, 92,000,000 shares authorized; 17,450,476 and 13,760,000 shares issued and outstanding at January 31, 2024 and April 30, 2023 , respectively 1,745 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 13,313,523 - Retained earnings (accumulated deficit) (39,718 ) 522,710 Total Maison Solutions, Inc. Stockholders' Equity 13,275,774 524,310 Noncontrolling interests 359,573 267,947 Total Stockholders' Equity 13,635,347 792,257 Total Liabilities and Stockholders' Equity $ 44,200,029 $ 34,584,022 MAISON SOLUTIONS INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Nine Months ended January 31 , 2024 2023 Cash flows from operating activities Net (loss) income $ (470,802 ) $ 1,228,281 Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities: Depreciation and amortization expenses 274,476 312,549 Bad debt reversal (105,322 ) - Provision for inventory shrinkage reserve (1,088 ) 29,479 Investment loss 63,982 - Changes in deferred taxes (6,135 ) (8,229 ) Changes in operating assets and liabilities: Accounts receivable (440,985 ) (880,952 ) Accounts receivable - related party (219,260 ) 85,981 Inventories (40,147 ) 242,560 Prepayments 1,065,243 703,023 Other receivables and other current assets 124,182 (238,475 ) Security deposits - 5,654 Accounts payable (1,451,371 ) (1,290,541 ) Accounts payable - related party 128,599 94,193 Accrued expenses and other payables (9,454 ) (156,804 ) Contract Liabilities (141,009 ) (127,138 ) Operating lease liabilities 227,728 149,489 Taxes payables 108,247 192,391 Other long-term payables 5,677 22,764 Net cash (used in) provided by operating activities (887,439 ) 364,225 Cash flows from investing activities Payment for acquisition of subsidiary - (2,500,000 ) Payment for leasehold improvement of the supermarket (307,427 ) Payments of equipment purchase (9,656 ) (24,185 ) Payments of intangible assets purchase (2,950,000 ) - Loans repaid from third parties - 4,410,270 Investment into TMA Liquor Inc (75,000 ) - Investment into HKGF Market of Arcadia (1,800,000 ) - Net cash (used in) provided by investing activities (5,142,083 ) 1,886,085 Cash flows from financing activities Bank overdraft - (281,941 ) Repayments on loan payables (297,510 ) (261,923 ) Repayments to related parties - (62,932 ) Repayment of note payable (150,000 ) - Borrowings from related parties - (34,600 ) Net proceeds from issuance of common stock 13,313,892 - Net cash provided by (used in) financing activities 12,866,382 (641,396 ) Net changes in cash and restricted cash 6,836,860 1,608,914 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 $ 9,407,727 $ 2,581,345 Supplemental disclosure of cash and restricted cash Cash $ 9,406,626 $ 2,580,244 Restricted cash 1,101 1,101 Total cash and restricted cash $ 9,407,727 $ 2,581,345 Supplemental disclosure of cash flow information Cash paid for interest $ 81,369 $ 29,577 Cash paid for income taxes $ 322,610 $ 8,481 SOURCE: Maison Solutions Inc. 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