Scott’s Liquid Gold-Inc. Reports Third Quarter Results
Third Quarter 2020 Highlights:
- Net sales of $7.2 million, negatively impacted by COVID-related supply chain issues, partially offset by Biz and Dryel acquisition
- Net loss of $0.5 million (($0.04) per share)
- Includes $0.3 million of expenses related to supply chain transition and Biz and Dryel acquisition
- Gross margin of 44.8%, an increase of 3.8% from Q3 2019
DENVER–(BUSINESS WIRE)–
Scott’s Liquid Gold-Inc. (OTC: SLGD) today announced operating results for the three months ended September 30, 2020.
President and Chief Executive Officer Mark Goldstein stated, “As we previously announced, pandemic driven raw material and container shortages impacted our third quarter revenue. We have seen limited improvements throughout our supply chain and expect better results in the fourth quarter, though challenges remain.”
Net Sales
Net sales remained level for three months ended September 30, 2020 compared to last year because a decrease in sales due to COVID-driven supply chain shortages was offset by an increase in net sales due to our Kids N Pets, Biz and Dryel acquisitions.
Net sales for the nine months ended September 30, 2020 increased $0.8 million compared to last year due to our Kids N Pets, Biz and Dryel acquisitions, partially offset by decreased sales for multiple product lines due to COVID-related shortages.
Net Loss
Our net loss of $0.5 million for the three months ended September 30, 2020 was primarily driven by COVID-related supply chain issues, increased SG&A expenses attributable to supply chain transition, acquisition-related expenses and interest expense associated with our new debt. These were partially offset by an increase in gross profit driven by the introduction of our Kids N Pets and SLG One products during the fourth quarter of 2019, the introduction of our Biz and Dryel products during the third quarter of 2020, and margin increases associated with outsourcing.
We reported a $0.4 million decrease in net loss for the nine months ended 2020 compared to last year due to our Kids N Pets, Biz and Dryel acquisitions, improved margins due to outsourcing our manufacturing, and a $0.4 million transition payment received related to the termination of our MJ distribution agreement. These decreases in net loss were partially offset by decreased sales caused by COVID-related reduced store traffic and raw material supply chain issues, increased SG&A due to supply chain transition and acquisition-related expenses, gain on sale of equipment during 2019, and interest expense associated with our new debt.
Cash Flow
Cash flow provided by operating activities was $4.3 million for the nine months ended September 30, 2020, as compared to cash flow provided from operating activities of $1.1 million for the same 2019 period. The $3.2 million increase in operating cash flow was primarily the result of our Kids N Pets, Biz, and Dryel acquisitions, as well as our improved margins driven by cost savings from outsourcing.
About Scott’s Liquid Gold-Inc.
Scott’s Liquid Gold-Inc. develops, markets, and sells high-quality, high-value household and personal care products nationally and internationally to mass merchandisers, drugstores, supermarkets, hardware stores, e-commerce retailers, other retail outlets, and to wholesale distributors. Over the last 65+ years we have developed a reputation for delivering products that consumers know and trust.
Our flagship product, Scott’s Liquid Gold® Wood Care, is a leader in its category and is known for bringing life back to and protecting all types of natural wood surfaces. Our Kids N Pets® brands are award winning, safe, nontoxic, stain and odor removing products targeted toward households with children and pets. Our newly acquired Biz and Dryel are top performing laundry care products, with Biz being a top stain removing laundry additive, and Dryel being the market leader in at-home dry cleaning.
Scott’s Liquid Gold-Inc. also owns Neoteric Cosmetics, a personal care company with a rich history of offering products that deliver high-quality, proven results that customers expect. Neoteric’s personal care products are embraced and respected by both medical professionals and consumers alike and include brands such as Alpha® Skin Care, Prell®, and Denorex®. Neoteric Cosmetics is also the proud American specialty channel distributor for Batiste Dry Shampoo.
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SCOTT’S LIQUID GOLD-INC. & SUBSIDIARIES Condensed Consolidated Statements of Operations (Unaudited) (in thousands, except per share data) |
|||||||||||||||
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
September 30, |
|
|
September 30, |
|
||||||||||
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
||||
|
Net sales |
$ |
7,197 |
|
|
$ |
7,178 |
|
|
$ |
21,134 |
|
|
$ |
20,365 |
|
|
Cost of sales |
|
3,973 |
|
|
|
4,235 |
|
|
|
11,578 |
|
|
|
12,877 |
|
|
Gross Profit |
|
3,224 |
|
|
|
2,943 |
|
|
|
9,556 |
|
|
|
7,488 |
|
|
Gross Margin |
|
44.8 |
% |
|
|
41.0 |
% |
|
|
45.2 |
% |
|
|
36.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Advertising |
|
169 |
|
|
|
105 |
|
|
|
531 |
|
|
|
491 |
|
|
Selling |
|
2,168 |
|
|
|
1,369 |
|
|
|
5,371 |
|
|
|
4,381 |
|
|
General and administrative |
|
1,377 |
|
|
|
1,223 |
|
|
|
4,284 |
|
|
|
3,604 |
|
|
Total operating expenses |
|
3,714 |
|
|
|
2,697 |
|
|
|
10,186 |
|
|
|
8,476 |
|
|
(Loss) income from operations |
|
(490 |
) |
|
|
246 |
|
|
|
(630 |
) |
|
|
(988 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
– |
|
|
|
28 |
|
|
|
3 |
|
|
|
89 |
|
|
Interest expense |
|
(137 |
) |
|
|
(5 |
) |
|
|
(215 |
) |
|
|
(14 |
) |
|
Gain on sale of equipment |
|
– |
|
|
|
|
|
|
|
– |
|
|
|
110 |
|
|
Other income |
|
– |
|
|
|
– |
|
|
|
350 |
|
|
|
– |
|
|
(Loss) income before income taxes |
|
(627 |
) |
|
|
269 |
|
|
|
(492 |
) |
|
|
(803 |
) |
|
Income tax benefit |
|
110 |
|
|
|
118 |
|
|
|
174 |
|
|
|
144 |
|
|
Net (loss) income |
$ |
(517 |
) |
|
$ |
387 |
|
|
$ |
(318 |
) |
|
$ |
(659 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income per common share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
(0.04 |
) |
|
$ |
0.03 |
|
|
$ |
(0.03 |
) |
|
$ |
(0.05 |
) |
|
Diluted |
$ |
(0.04 |
) |
|
$ |
0.03 |
|
|
$ |
(0.03 |
) |
|
$ |
(0.05 |
) |
|
Weighted average shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
12,480 |
|
|
|
12,462 |
|
|
|
12,468 |
|
|
|
12,435 |
|
|
Diluted |
|
12,480 |
|
|
|
12,462 |
|
|
|
12,468 |
|
|
|
12,435 |
|
|
SCOTT’S LIQUID GOLD-INC. & SUBSIDIARIES Condensed Consolidated Balance Sheets (Unaudited) (in thousands, except par value amounts) |
|||||||
|
|
September 30, |
|
|
December 31, |
|
||
|
|
2020 |
|
|
2019 |
|
||
|
|
(Unaudited) |
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
$ |
174 |
|
|
$ |
1,094 |
|
|
Accounts receivable, net |
|
4,451 |
|
|
|
2,695 |
|
|
Inventories, net |
|
5,747 |
|
|
|
7,841 |
|
|
Income taxes receivable |
|
107 |
|
|
|
705 |
|
|
Property and equipment held for sale |
|
– |
|
|
|
500 |
|
|
Prepaid expenses |
|
701 |
|
|
|
368 |
|
|
Other current assets |
|
– |
|
|
|
71 |
|
|
Total current assets |
|
11,180 |
|
|
|
13,274 |
|
|
|
|
|
|
|
|
|
|
|
Property and equipment, net |
|
129 |
|
|
|
124 |
|
|
Deferred tax asset |
|
692 |
|
|
|
556 |
|
|
Goodwill |
|
5,280 |
|
|
|
3,230 |
|
|
Intangible assets, net |
|
15,105 |
|
|
|
8,719 |
|
|
Operating lease right-of-use assets |
|
3,048 |
|
|
|
188 |
|
|
Other assets |
|
38 |
|
|
|
– |
|
|
Total assets |
$ |
35,472 |
|
|
$ |
26,091 |
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Shareholders’ Equity |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Accounts payable |
$ |
2,959 |
|
|
$ |
1,809 |
|
|
Accrued expenses |
|
589 |
|
|
|
422 |
|
|
Current portion of long-term debt |
|
1,000 |
|
|
|
– |
|
|
Operating lease liabilities, current portion |
|
301 |
|
|
|
197 |
|
|
Total current liabilities |
|
4,849 |
|
|
|
2,428 |
|
|
|
|
|
|
|
|
|
|
|
Long-term debt, net of current portion and debt issuance costs |
|
4,031 |
|
|
|
– |
|
|
Operating lease liabilities, net of current |
|
2,977 |
|
|
|
19 |
|
|
Other liabilities |
|
143 |
|
|
|
27 |
|
|
Total liabilities |
|
12,000 |
|
|
|
2,474 |
|
|
|
|
|
|
|
|
|
|
|
Shareholders’ equity: |
|
|
|
|
|
|
|
|
Preferred stock, no par value, authorized 20,000 shares; no shares issued and outstanding |
|
– |
|
|
|
– |
|
|
Common stock; $0.10 par value, authorized 50,000 shares; issued and outstanding 12,513 shares (2020) and 12,462 shares (2019) |
|
1,251 |
|
|
|
1,246 |
|
|
Capital in excess of par |
|
7,418 |
|
|
|
7,250 |
|
|
Retained earnings |
|
14,803 |
|
|
|
15,121 |
|
|
Total shareholders’ equity |
|
23,472 |
|
|
|
23,617 |
|
|
Total liabilities and shareholders’ equity |
$ |
35,472 |
|
|
$ |
26,091 |
|
|
SCOTT’S LIQUID GOLD-INC. & SUBSIDIARIES Condensed Consolidated Statements of Cash Flows (Unaudited) (in thousands) |
|||||||
|
|
Nine Months Ended |
|
|||||
|
|
September 30, |
|
|||||
|
|
2020 |
|
|
2019 |
|
||
|
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
Net loss |
$ |
(318 |
) |
|
$ |
(659 |
) |
|
Adjustments to reconcile net loss to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
976 |
|
|
|
552 |
|
|
Stock-based compensation |
|
106 |
|
|
|
119 |
|
|
Deferred income taxes |
|
(136 |
) |
|
|
(150 |
) |
|
Gain on sale of equipment |
|
– |
|
|
|
(110 |
) |
|
Change in operating assets and liabilities, net of effects of acquisition: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
(1,756 |
) |
|
|
336 |
|
|
Inventories |
|
3,373 |
|
|
|
787 |
|
|
Prepaid expenses and other assets |
|
(200 |
) |
|
|
196 |
|
|
Income taxes receivable |
|
598 |
|
|
|
1 |
|
|
Accounts payable, accrued expenses, and other liabilities |
|
1,659 |
|
|
|
40 |
|
|
Total adjustments to net loss |
|
4,620 |
|
|
|
1,771 |
|
|
Net cash provided by operating activities |
|
4,302 |
|
|
|
1,112 |
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
Acquisition |
|
(10,529 |
) |
|
|
– |
|
|
Proceeds from sale of property and equipment |
|
500 |
|
|
|
110 |
|
|
Purchase of internal-use software |
|
– |
|
|
|
(286 |
) |
|
Purchase of property and equipment |
|
(17 |
) |
|
|
(101 |
) |
|
Cash paid for leasehold improvements |
|
(484 |
) |
|
|
– |
|
|
Reimbursement for leasehold improvements |
|
247 |
|
|
|
– |
|
|
Net cash used in investing activities |
|
(10,283 |
) |
|
|
(277 |
) |
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
Proceeds from revolving credit facility |
|
6,525 |
|
|
|
– |
|
|
Repayments of revolving credit facility |
|
(3,795 |
) |
|
|
– |
|
|
Proceeds from term loan |
|
3,000 |
|
|
|
– |
|
|
Repayments of term loan |
|
(167 |
) |
|
|
– |
|
|
Proceeds from PPP loan |
|
600 |
|
|
|
– |
|
|
Repayment of PPP loan |
|
(600 |
) |
|
|
– |
|
|
Payments for debt issuance costs |
|
(569 |
) |
|
|
– |
|
|
Proceeds from exercise of stock options |
|
67 |
|
|
|
43 |
|
|
Net cash provided by financing activities |
|
5,061 |
|
|
|
43 |
|
|
|
|
|
|
|
|
|
|
|
Net (decrease) increase in cash and cash equivalents |
|
(920 |
) |
|
|
878 |
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, beginning of period |
|
1,094 |
|
|
|
6,232 |
|
|
Cash and cash equivalents, end of period |
$ |
174 |
|
|
$ |
7,110 |
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosures: |
|
|
|
|
|
|
|
|
Cash paid during the period for interest |
$ |
23 |
|
|
$ |
14 |
|
Note Regarding Forward-Looking Statements
This news release may contain “forward-looking statements” within the meaning of the federal securities laws that are intended to qualify for the Safe Harbor from liability established by the Private Securities Litigation Reform Act of 1995. “Forward-looking statements” generally can be identified by the use of forward-looking terminology such as “assumptions,” “target,” “guidance,” “strategy,” “outlook,” “plans,” “projection,” “may,” “will,” “would,” “expect,” “intend,” “estimate,” “anticipate,” “believe”, “potential,” or “continue” (or the negative or other derivatives of each of these terms) or similar terminology.
Forward-looking statements convey our expectations, intentions, or forecasts about future events, circumstances, or results. All forward-looking statements, by their nature, are subject to assumptions, risks, and uncertainties, which may change over time and many of which are beyond our control. You should not rely on any forward-looking statement as a prediction or guarantee about the future. Actual future objectives, strategies, plans, prospects, performance, conditions, or results may differ materially from those set forth in any forward-looking statement. Some of the factors that may cause actual results or other future events or circumstances to differ from those in forward-looking statements are described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 and the Company’s subsequent Quarterly Reports on Form 10-Q and other periodic reports filed with the Securities and Exchange Commission. Any forward-looking statement made by us or on our behalf speaks only as of the date that it was made. We do not undertake to update any forward-looking statement to reflect the impact of events, circumstances, or results that arise after the date that the statement was made, except as required by applicable securities laws. You, however, should consult further disclosures (including disclosures of a forward-looking nature) that we may make in any subsequent filings with the Securities and Exchange Commission.
View source version on businesswire.com: https://www.businesswire.com/news/home/20201112005936/en/
Investor Relations Contact:
Kevin Paprzycki, CFO
303.576.6032
KEYWORDS: United States North America Colorado
INDUSTRY KEYWORDS: Home Goods Retail Specialty
MEDIA:
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