MTL reports 9% increase in first quarter net profit

October 15, 2019

Margaritaville (Turks) Limited (MTL) for the three months ended August 31, 2019 reported revenues which increased by 12% for the period to US$2.03 million (2018: US$1.82 million). The company commented that revenue was, “earned from the 282,040 passengers that arrived at the port during the period resulting in a spend-per-passenger of US$7.21.”

Cost of sales also went up by 6% to US$500,920 (2018 US$471,386) which resulted in COS margin of 25%. Management noted the company, “is focused on leveraging its Fixed Costs so that the rate of increase in overall costs is at a lower than the rate of revenue increase.” Furthermore, the company stated, “Cost of Sales for the Quarter was 24.62% of the revenue compared to 25.91% in the prior year. The value of inventory on hand has been increased to ensure that the need to purchase on the island is reduced. It costs more to purchase on the island and there is less control on the quality.”

Consequently, gross profit rose for the three-month period by 14%, to US$1.53 million in Q1 2019 from US$1.35 million in Q1 2018.

Total expenses was increased by 15% for the period in review to US$1.22 million in 2019, up from US$1.06 million in 2018. The increase was associated with a 16% rise in administrative expenses from US$924,775 in 2018 to US$1.08 million. The Company also highlighted, “ there was a change by the Government in the Gratuity rules during the latter half of fiscal 2019. The effect of that change saw the company incurring additional expenses towards employee benefits. In addition, there were a number of Work Permit renewals during the Quarter.” Depreciation and amortisation rose 18% to US$64,564 (2018: US$54,922), while promotional expenses slightly decreased by 5% to US$13,913 (2018: US$14,580).

Consequently, operating profit climbed by 9% to US$317,302 (2018: US$290,991). Total comprehensive income for the quarter amounted to US$317,302 relative to US$290,816 million the previous year, a 9% increase.

The twelve-month earnings-per-share was US$0.012, while for Q1 2019, EPS amounted to US$ 0.0047 compared to US$0.0043 of the corresponding period of last year. The number of shares used in our calculations was 67,500,000. MTL last traded on October 14, 2019 at $0.26.

MTL further noted, “We have commenced preparation for the busier winter season ahead. There are a number of open vacancies to be filled in order to maximize the revenue capture from the number of Cruises projected for the season. We have commenced the process for work permits and are hopeful that the Government will respond favourably to the requests.”

Balance Sheet Highlights:

The company, as at August 31, 2019, recorded total assets of US$5.96 million, an decrease of 4% when compared to US$6.20 million as at August 31, 2018. This was mainly as a result of a 17% decline in ‘Owing by related companies’ from US$1.75 million as at August 31, 2018 to US$1.46 million, however, partially tempered by ‘Inventories’ which increased to US$931,121 (2018: US$ 840,253).

Total Stockholders’ equity as at August 31, 2019 closed at US$4.85 million, a 5% decrease from US$5.08 million for the corresponding period last year. This resulted in a book value of US$ 0.0718.

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