Massimo Group (Massimo Motorsports) revenues increased 32.4 percent year-over-year to $35.4 million in the second quarter, compared to $26.7 million in the prior-year Q2 period. The increase in revenue was primarily due to the combined effect of rising demand in the U.S. ATV and UTV markets and a modified sales strategy.

The manufacturer and distributor of power sports vehicles and pontoon boats noted that gross profit increased 41.9 percent year-over-year to $11.5 million in Q2 from $8.1 million in the year-ago Q2 period.

Gross margin was 32.5 percent of sales in Q2, compared with 30.3 percent in the Q2 period last year. The company primarily attributed the increase in gross profit margin to higher net sales partly due to decreased returns and partly offset by higher cost of sales due to increased freight costs in the second quarter compared to last year.

“During the second quarter, we focused on strategic expansions in production, distribution and products to support ongoing revenue momentum,” said David Shan, founder, chairman and CEO of the Massimo Group. “With significant top and bottom-line growth on strong sales and margin improvement, we continue to build manufacturing capacity aimed at enhancing flexibility and increasing annual production. We continued to add new distribution partners and retailers to increase our national footprint and drive sales across our existing and new diversified product portfolio.”

UTVs, ATVs and E-Bikes
Revenue from sales of UTVs, ATVs and E-bikes increased 53.3 percent to $34.2 million in the second quarter from $22.3 million in the second quarter of fiscal 2023. The increase in revenue was attributable to the expansion into larger retail stores in the U.S. and to a shift in sales strategy, mainly focused on in-store sales, which generally involve larger volumes and fewer returns.

The cost of revenue on UTVs, ATVs and E-bikes increased 55.7 percent to $23.0 million in the second quarter from $14.8 million in the second quarter last year, and the gross profit increased 48.6 percent, from $7.6 million in Q2 2023 to $11.2 million in Q2 this year. The increase in the cost of revenue was in line with the increase in sales.

The gross margin decreased by 110 basis points to 32.8 percent in the second quarter. The slight decrease was primarily due to a rise in global container freight in the second quarter of this year. Freight costs increased in the second quarter compared with Q2 last year.

Pontoon Boats
Second-quarter revenue from pontoon boat sales decreased 73.5 percent to $1.2 million from $4.4 million in the 2023 second quarter, reportedly due primarily to the company’s shift from retailing to dealer sales starting in fiscal 2024. Dealers have experienced high rejection rates at floorplan financing providers such as Northpoint, which is consistent with the industry-wide trend.

The cost of revenue on pontoon boats decreased 76.5 percent to $0.9 million in the second quarter from $3.9 million in the 2023 second quarter. Gross profit decreased 51.6 percent to $0.3 million in Q2 from $0.5 million in Q2 2023.

Gross margin increased 10.2 percentage points to 22.4 percent of sales in the second quarter, compared to 12.3 percent of sales in the second quarter of fiscal 2023. The increased gross margin was primarily due to the company’s shift to selling higher-margin models of pontoon boats.

Expenses
Selling and marketing expenses increased 24.6 percent year-over-year, from $2.5 million in the second quarter of fiscal 2023 to $3.1 million in the second quarter of fiscal 2024. The increase in selling expenses was mainly due to the rise in shipping and handling fees.

General and administrative expenses increased 22.7 percent to $4.1 million in Q2 from $3.3 million in the 2023 second quarter. The increase was mainly due to increased salaries and benefits, a one-time impairment loss and rent expenses partly offset by a decrease in professional and legal fees.

Total operating expenses increased 36.2 percent to $7.9 million for the three months ending June 30, 2024, compared to $5.8 million in the second quarter of the prior year.

“Several production initiatives during the quarter are positioning us to further expand output levels each month,” added Shan. “A new expansion has added 90,000 sq. ft. to our manufacturing facility in Garland, TX, to support increased production across motor and marine product verticals. At this facility, we are also launching a new automated vehicle assembly robot line expected to be installed in the coming weeks. This automation is expected to improve efficiency by 50 percent and enhance safety for the production of ATV and UTV vehicle lines.”

Net Income
Net income for the second quarter was $2.8 million, or 7 cents per basic and diluted share, compared to net income of $2.1 million, or 5 cents per basic and diluted share, in the three months ended June 30, 2023.

Balance Sheet and Cash Management
Cash and cash equivalents totaled $1.3 million at quarter-end compared to $0.8 million at December 31, 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 $7.1 million for the six months ended June 30, 2024, compared to net cash provided of $2.7 million in the six months ended June 30, 2023, said to be primarily due to increases in accounts receivable and inventory of $1.9 million and $5.0 million, respectively, and a decrease in accounts payable of $4.5 million. This is consistent with the company using part of the IPO proceeds as working capital to grow sales.

Image courtesy Massimo Group