NEWS DETAILS

October 30, 2023

Hong Kong, October 30, 2023 -- Millennium Group International Holdings Limited (Nasdaq: MGIH) (the “Company”, “we”, “our”, “us” or “MGIH”), a long-established paper-based packaging solutions supplier headquartered in Hong Kong with operations mainly in the People’s Republic of China (“PRC”) and Vietnam, today announced its full fiscal year 2023 financial results ended June 30, 2023..

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Fiscal Year 2023 Full Year Financial Results Compared to Fiscal Year 2022 Full Year

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•   Revenues were $45.6 million for the fiscal year ended June 30, 2023, a 31.2% decrease from $66.2 million for the fiscal year ended June 30, 2022;

•   Gross profit was $9.1 million for the fiscal year ended June 30, 2023, or 19.9% of revenues compared to $16.3 million, or 24.6% of revenues for the fiscal year ended June 30, 2022;

•   Net loss was $(0.35) million for the fiscal ended June 30, 2023, compared to net income of $4.08 million for the fiscal year ended June 30, 2022;

•   Basic and diluted earnings per share (“EPS”) was $(0.03) per share for the fiscal year ended June 30, 2023, compared to $0.41 per share for the fiscal year ended June 30, 2022; and

•   Cash and cash equivalents were $27.6 million as of June 30, 2023, a 46.3% increase from $19.4 million as of June 30, 2022.

“Millennium Group faced ongoing market and industry-wide challenges that contributed to a decrease in revenues and profitability in the second half of the fiscal year,” said Mr. Ming Hung Lai, Chairman of MGIH. “The adverse economic conditions within the PRC and broader Asian markets have affected demand for paper and packaging products, resulting in lower revenue performance in the second half of fiscal 2023 than the first half, albeit in line with our peer group. As we prospectively review conditions in the first half of fiscal 2024, we see some signs of a rebound in demand for paper packaging products. However, the demand for corrugated products remains a challenge.”

“In light of the current market environment, we are continuing our efforts to improve overall profitability, which include reducing costs through negotiations with suppliers to improve pricing on material inputs, actions to reduce labor costs through staff reductions, and tighter controls on staff overtime. We are positioned to negotiate with customers to secure improved pricing to reflect the value of our offerings because of our portfolio of innovative products and diversified services. Looking ahead, we anticipate the current soft conditions in the broader economic environment will remain in the near term, but have seen recent signs of improvement in demand for packaging products that signal optimism for fiscal 2024. Notably, we have made progress on our long-term growth initiatives, including positioning the Company for expansion both geographically and into packaging for luxury consumer products,” Mr. Lai concluded.

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Revenues

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For the fiscal year ended June 30, 2023 and 2022, total revenues were $45.6 million and $66.2 million, respectively, comprised mainly from the sale of packaging products and corrugated products and supply chain management solutions. The decrease was mainly due to the lower average selling price and total volume of sales. The average selling price decreased from $1,850 per tonnage in the year ended June 30, 2022, to $1,510 per tonnage in the year ended June 30, 2023. The decreased pricing for the year is mainly attributed to lower prices for corrugated products and supply chain management solutions. The decreased pricing was partially offset by higher packaging pricing. Due to continued economic factors faced by customers, price relief requests have further decreased prices. The total volume of sales decreased from 35,839 tonnages in the year ended June 30, 2022, to 30,189 tonnages in the year ended June 30, 2023. This was primarily due to a significant decline in volume in packaging products and supply chain management, however an increase in sales volume of corrugated products helped mitigate the overall decrease in sales volume. To address the revenue decrease, management has taken actions to strengthen customer loyalty and hired a sales and supply chain team to expand and diversify the Company’s existing global customer base.

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Cost of Revenues

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Cost of revenues mainly consisted of raw paper, staff, auxiliary material, depreciation, utilities and outsourcing.

For the fiscal year ended June 30, 2023 and 2022, cost of revenues were $36.5 million and $50.0 million, respectively. The decrease is mainly attributable to the reduced consumption of materials associated with the lower sales volume during the year ended June 30, 2023. The decrease in cost of revenue was partially offset by a slight increase in the unit cost of raw materials. In response to the increased material and staff costs, management is actively exploring cost reduction possibilities, including negotiations with suppliers to lower material costs, and assessing methods to streamline operations and reduce staff expenditures.

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Gross Profit

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Gross profit for the fiscal year ended June 30, 2023 and 2022 were $9.1 million and $16.3 million, representing 19.9% and 24.6% of operating revenues, respectively. For the fiscal years ended June 30, 2022 and 2023, the decrease in gross profit was mainly due to the decrease in gross profit margin from 21.0% to 12.7%, respectively for corrugated products while the gross profit for packaging products and supply chain management solutions saw minimal declines. Despite a decline in revenues during the fiscal year ended June 20, 2023, the Company continues to refine operating efficiency and reduce costs to improve gross profit.

Gross profit for the fiscal year ended June 30, 2023 and 2022 were $9.1 million and $16.3 million, representing 19.9% and 24.6% of operating revenues, respectively. For the fiscal years ended June 30, 2022 and 2023, the decrease in gross profit was mainly due to the decrease in gross profit margin from 21.0% to 12.7%, respectively for corrugated products while the gross profit for packaging products and supply chain management solutions saw minimal declines. Despite a decline in revenues during the fiscal year ended June 20, 2023, the Company continues to refine operating efficiency and reduce costs to improve gross profit.

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Selling and Marketing Expenses

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Selling and marketing expenses consisted primarily of sales and administrative employee-related expenses and commissions. For the fiscal year ended June 30, 2023, selling and marketing expenses decreased 16.1% to $4.9 million from $5.8 million in the fiscal year ended June 30, 2022, primarily due to the decrease in consultancy fees and transportation and handling fees as a result of decreased sales volume for the year ended June 30, 2023.

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General and Administrative Expenses

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General and administrative expenses mainly included staff cost for general and administrative purposes. For the fiscal year ended June 30, 2023 and 2022, administrative expenses were $5.3 million and $4.9 million respectively. The increase is mainly due to professional fees and environment protection expenses as a result of an increase in audit fees and a decrease in an environment protection subsidy from the PRC government for the year ended June 30, 2023.

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Net Income

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As a result of the factors described above, net loss for the fiscal year ended June 30, 2023 was approximately $(0.4) million, compared to net income of $4.1 million, for the fiscal year ended June 30, 2022.

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Earnings per Share - Basic and Diluted

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Earnings per basic and diluted share for the fiscal year ended June 30, 2023 was $(0.03), compared to $0.41 for the same period of 2022.

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Liquidity and Capital Resources

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The Company’s primary sources of liquidity consisted of existing cash and cash equivalents, cash flows from operating activities and availability under loan arrangements with banks. As of June 30, 2023, the Company had outstanding bank borrowings of approximately $13.4 million. The bank borrowings are short-term in nature and have variable interest rates between 4.52% to 7.28%. As of the date of this report, the primary uses of the bank borrowings are for operations and capital expenditures.

Working capital was $25.4 million as of June 30, 2023 as compared to $22.5 million as of June 30, 2022. Cash and cash equivalents were $27.6 million as of June 30, 2023, as compared to $18.8 million as of June 30, 2022.

Although the Company’s business has been adversely impacted by the softening of international trade activities and decreases in consumer demand and related volumes in packaging material, management believes that net cash generated from operating activities, cash on hand, available borrowings under the Company’s revolving credit facility and available capital through access to capital markets will be adequate to meet liquidity and capital requirements.

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Cash Flows

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The following summarizes the key components of our cash flows for the fiscal years ended June 30, 2023, and 2022:

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Operating Activities

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During the fiscal years ended June 30, 2023 and 2022, the cash inflows from our operating activities were primarily derived from the revenue generated from the sale of paper products and from the provision of supply chain management solutions, whereas the cash outflows for our operating activities was mainly comprised of purchases of raw paper and finished goods, shipping costs, staff costs, and administrative expenses.

Net cash provided by operating activities increased to $8.1 million for the year ended June 30, 2023, from $2.0 million for the year ended June 30, 2022. Net cash generated from operating activities is primarily reflected as net income, as adjusted for our non-operating items, such as depreciation and amortization, impairment of inventories, allowance/(reversal) for bad debts and effects of changes in operating assets and liabilities such as an increase or decrease in inventories, accounts receivable, accounts payable, other payables and accruals, related party balances in trade nature, right-of-use of assets and lease obligations. The increase in net cash provided by operating activities was primarily the result of reductions in accounts receivable and inventory, partially offset by lower net income and reductions in accounts payable and other current liabilities.

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Investing Activities

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Cash flows generated from investing activities primarily consisted of (i) the purchase of property, plant and equipment; (ii) the purchase of intangible assets and (iii) the proceeds from sale of property, plant and equipment.

For the fiscal year ended June 30, 2023, net cash used in investing activities was approximately $0.2 million, mainly from acquisition of property, plant and equipment and intangible assets of approximately $0.2 million.

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Financing Activities

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Cash flows provided by financing activities primarily consisted of (i) proceeds from new bank loans; (ii) repayment of bank loans; and (iii) proceeds from issuance of shares.

For the year ended June 30, 2023, net cash provided by financing activities was approximately $1.8 million, mainly consisted of (i) repayment of bank loans of approximately $18.7 million; (ii) proceeds from new bank loans of approximately $16.2 million and (iii) net proceeds from issuance of shares of approximately $4.2 million.

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Capital Expenditures

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The Company had capital expenditures of $0.22 million and $0.54 million for the fiscal year ended June 30, 2023 and 2022, respectively. Our capital expenditures was mainly used for improvement of our production equipment. Management intends to fund future capital expenditures with working capital, bank borrowings, lease financing and other alternative financings. The Company will continue to make capital expenditures as appropriate to support business growth.

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About Millennium Group International Holdings Limited

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Founded in 1978, Millennium Group is a long-established paper-based packaging solutions supplier committed to providing creative and sustainable packaging solutions to worldwide brands. The Company manufactures packaging products and corrugated products, and provides packaging products supply chain management solutions for a wide range of industries. Headquartered in Hong Kong with operations mainly in the PRC and Vietnam, the Company adopts a one-stop integrated service approach with an objective to cover the entire value chain of its customers, with the sales of its products to PRC, Hong Kong, Vietnam, Myanmar, Australia, Indonesia, Cambodia, Taiwan, Thailand, United States, India and Germany. The ordinary shares of the Company trade on The Nasdaq Capital Market under the ticker symbol “MGIH”. For more information, please visit the Company’s website at

https://investors.millennium-gp.com/

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Forward-Looking Statements

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This press release contains forward-looking statements. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. Statements that are not historical facts, including statements about the Company’s beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties, and a number of factors could cause actual results to differ materially from those contained in any forward-looking statement. In some cases, forward-looking statements can be identified by words or phrases such as “may,” “will,” “expect,” “anticipate,” “target,” “aim,” “estimate,” “intend,” “plan,” “believe,” “potential,” “continue,” “is/are likely to” or other similar expressions. The Company may also make written or oral forward-looking statements in its reports filed with, or furnished to, the U.S. Securities and Exchange Commission, in its annual reports to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. These statements are subject to uncertainties and risks including, but not limited to, the following: the Company’s goals and strategies; the Company’s future business development; financial condition and results of operations; product and service demand and acceptance; reputation and brand; the impact of competition and pricing; changes in technology; government regulations; fluctuations in general economic and business conditions in U.S., Hong Kong and China and assumptions underlying or related to any of the foregoing and other risks contained in reports filed by the Company with the SEC. For these reasons, among others, investors are cautioned not to place undue reliance upon any forward-looking statements in this press release. Additional factors are discussed in the Company’s filings with the SEC, which are available for review at www.sec.gov. The Company undertakes no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date hereof. For additional risks and uncertainties that could impact Millennium Group’s forward-looking statements, please see disclosures contained in Millennium Group’s public filings with the SEC, including the “Risk Factors” in Millennium Group’s Annual Report on Form 20-F filed with the Securities and Exchange Commission on October 30, 2023 and which may be viewed at www.sec.gov.

For more information, please contact:

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Millennium Group International Holdings Limited

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Investor Relations

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Email: ir@millennium-gp.com

Lambert Global

Jackson Lin

Phone: +1-646-717-4593

Email: jlin@lambert.com