The Marygold Companies, Inc. (MGLD) is a diversified global holding firm with a diverse portfolio of operating subsidiaries across various industries, including fund management, food products, beauty products, security systems, and financial services. The company has a rich history spanning over two decades, marked by strategic acquisitions, innovative product development, and a relentless pursuit of growth opportunities.
Company History and Evolution
Established in 2015, The Marygold Companies began as an investment management firm focused on USCF Investments. Over the years, the company has undergone a remarkable transformation, steadily expanding its footprint and diversifying its business interests. In 2017, The Marygold Companies made its first major acquisition with Gourmet Foods, Ltd., a New Zealand-based company operating a commercial-scale bakery and a digital printing business. This move marked the company's entry into the food products industry. In the same year, the company also acquired Brigadier Security Systems 2000 Ltd., a Canadian security systems provider, expanding its operations into the security sector.
The company demonstrated its resilience during the COVID-19 pandemic in 2020, leveraging its diversified business model to navigate the global market disruptions and supply chain challenges. In 2021, The Marygold Companies further expanded its portfolio by acquiring Kahnalytics, Inc., a California-based beauty products company doing business as Original Sprout.
A significant strategic move came in 2022 when The Marygold Companies established Marygold & Co. in both the United States and the United Kingdom, marking its entry into the financial services industry. This division offers investment advisory, asset management, and financial planning services to individual and institutional clients. The company further strengthened its position in this sector with the acquisition of Step-By-Step Financial Planners Limited, a UK-based investment advisory firm, in 2024.
Business Segments
Today, MGLD's operations are organized into five distinct segments, each contributing to the overall success of the organization.
USCF Investments, the company's fund management division, has established itself as a leading provider of Exchange-Traded Products (ETPs) and Exchange-Traded Funds (ETFs). With a strong focus on commodities and alternative asset classes, USCF Investments has garnered a loyal client base and a reputation for delivering innovative investment solutions. As of September 30, 2024, the division managed assets totaling $3.1 billion, down from $3.5 billion a year earlier, as the high-interest rate environment and global economic uncertainty weighed on commodity prices and investor sentiment. For the quarter ended September 30, 2024, USCF Investments reported revenue of $4.59 million, down 9% from the prior year quarter. Operating income for the fund management segment decreased 45% to $960,000, impacted by the lower revenue as well as a 11% increase in fund operations expenses related to higher licensing fees, fund accounting, and administration costs associated with new fund launches.
The company's food products division, Gourmet Foods, operates a commercial-scale bakery and a digital printing establishment, Printstock Products, that specializes in producing specialty food wrappers. This segment has maintained a relatively stable performance, with revenue increasing by 5% year-over-year to $1.82 million in the first quarter of fiscal 2025. This was the net result of increased sales at the printing business offsetting a decline in the bakery division. Operating income for the food products segment was $8,000, relatively flat compared to the prior year period, as higher margin product sales at the bakery were offset by a non-recurring cost of goods sold adjustment and depreciation on the bakery's solar power system.
The beauty products division, represented by the Original Sprout brand, has faced some challenges in recent quarters. Revenue in this segment declined by 23% year-over-year to $597,000 in Q1 2025, as the company worked to control discounted pricing on its online sales channels. Management is focused on repositioning the brand for a larger presence on store shelves, which it expects will drive improved profitability in the coming quarters. Despite the revenue decline, this pricing action resulted in a 46% improvement in operating income for the beauty products segment to $173,000.
Brigadier Security Systems, the company's security systems division, has continued to perform well, reporting a 25% increase in revenue to $690,000 in Q1 2025. The segment's focus on commercial and public facility customers has helped offset the ongoing shifts in the residential security market. Operating income for the security systems business increased 87% to $133,000, benefiting from the higher revenue.
The financial services segment, comprising Marygold US and Marygold UK, has been an area of significant investment for The Marygold Companies. Marygold US recently launched a mobile banking fintech app, which is still in the early stages of development and generating only minimal revenue. As this app was only soft-launched in June 2023, it incurred an operating loss of $1.4 million in the quarter. Marygold UK, on the other hand, operates through two registered investment advisory subsidiaries and reported a 65% increase in revenue to $210,000 in Q1 2025, driven primarily by the acquisition of Step-By-Step Financial Planners in April 2024. However, the consolidated financial services segment still recorded an operating loss of $1.6 million, only slightly higher than the $1.5 million loss in the prior year period, as increased costs from the UK fintech rollout offset the revenue gains.
Financials
The company's overall financial performance in the first quarter of fiscal 2025 was marked by a net loss of $1.6 million, or $0.04 per share, compared to a net loss of $0.5 million, or $0.01 per share, in the same period last year. The increase in net loss was largely attributable to higher operating expenses, particularly in the areas of salaries and compensation, as well as continued investment in the development of the Marygold fintech app.
Revenue for Q1 2025 was $7.91 million, representing a 4% decrease compared to Q1 2024. This decline was primarily driven by a decrease in average Assets Under Management (AUM) in the fund management business. Average AUM for Q1 2025 was $3.1 billion compared to $3.5 billion in Q1 2024, with the decrease attributed to commodity price fluctuations, the high-interest rate environment, and geopolitical/economic uncertainty.
For the most recent fiscal year 2024, The Marygold Companies reported revenue of $32.84 million and a net loss of $4.07 million. Operating cash flow (OCF) for fiscal 2024 was negative $1.91 million, while free cash flow (FCF) was negative $1.97 million. In Q1 2025, OCF was negative $0.89 million, and FCF was negative $0.94 million.
The company operates primarily in the United States, Canada, New Zealand, and the United Kingdom, although specific performance details for each geographic market were not provided.
Liquidity
The Marygold Companies' balance sheet remains strong, with cash and cash equivalents of $6.67 million as of September 30, 2024, up from $5.5 million at the end of the prior fiscal year. The company's debt-to-equity ratio stands at 0.1453, indicating a relatively low level of financial leverage. The current ratio of 3.18 and quick ratio of 2.90 suggest a healthy short-term liquidity position.
The company recently secured a $4.38 million secured promissory note and has the potential to borrow an additional $2.18 million under the same terms. Additionally, The Marygold Companies has the right to request up to $10 million in additional financing from the lender, providing further financial flexibility if needed.
Legal and Regulatory Matters
The Marygold Companies is currently involved in several lawsuits related to its subsidiary USCF Investments and the performance of certain energy-focused ETFs during the 2020 market volatility. These legal proceedings represent a potential risk factor for the company and may impact future financial performance depending on their outcomes.
Future Outlook and Strategy
Moving forward, The Marygold Companies is focused on capitalizing on the growth opportunities within the fintech space, while also working to optimize the performance of its existing business segments. The company's leadership team is keenly aware of the challenges posed by the evolving competitive landscape, regulatory changes, and broader macroeconomic conditions, and is committed to implementing strategies to navigate these obstacles and drive long-term shareholder value.
The diverse nature of Marygold's business segments has resulted in a mixed financial performance. While the fund management, security systems, and UK financial advisory divisions reported year-over-year improvements, the company's investments in the new US fintech app and pricing actions in the beauty products segment have weighed on profitability. As Marygold continues to execute its strategy of developing new technology-driven financial services offerings while maintaining its legacy operating businesses, managing the balance between growth initiatives and profitability will be a key focus going forward.
Despite the near-term headwinds, The Marygold Companies' diversified business model, strong balance sheet, and unwavering commitment to innovation position the company well for the future. As the company continues to execute on its strategic initiatives, investors will be closely watching for signs of improved financial performance and the successful integration of the Marygold fintech app into the company's core offering.