First Quarter 2021 Highlights:
- Net sales of $9.4 million vs. $7.9 million in 2020
- Net loss of $0.3 million (($0.02) per share) driven by COVID-related supply chain costs
- Net cash from operating activities of $0.3 million vs. net cash used in operating activities of $0.6 million in 2020
Scott’s Liquid Gold-Inc. (OTC: SLGD) today announced operating results for the three months ended March 31, 2021.
“The last 18 months have been a period of meaningful change for Scott’s,” said Dan Roller, Chair of the Board of Scott’s Liquid Gold-Inc. “Last year, the company transitioned to an asset-light model with the sale of its manufacturing assets and continued to optimize its portfolio of brands. And last month, Mark Goldstein retired as CEO after 43 years with the company. The Board was pleased to name Scott’s Board member and twenty-year veteran of the consumer products industry, Tisha Pedrazzini, and Scott’s CFO, Kevin Paprzycki, as Interim Co-Presidents to succeed Mr. Goldstein. The Board and management team are currently evaluating every aspect of our business, and we look forward to sharing more details about our strategy, plans, and long-term vision for Scott’s later this year.”
Ms. Pedrazzini said, “I have spent most of the first few weeks in my new role meeting with employees and speaking with customers. My initial findings cement what I have believed since the day I joined the Board. We have a strong portfolio of brands, a dedicated team, and fantastic distribution through our longstanding relationships with many of America’s top retailers. The Scott’s team is currently 100% focused on refining and beginning to execute on a strategy to strengthen our core and position us for sustainable growth.”
“We were pleased to see our revenue rebound over the course of the first quarter,” stated Mr. Paprzycki. “While net sales grew 20% year over year, our profitability was impacted by continued Covid-related supply chain challenges, including raw material cost increases and distribution disruptions. We are taking action to address our current operational challenges while also laying the groundwork for faster growth. We view 2021 as a transition year for Scott’s, as we are laying the groundwork to enhance our competitive position, drive growth, and maximize shareholder value.”
First Quarter Financial Results
In the first quarter of 2021, net sales increased 20% to $9.4 million compared to $7.9 million in the year ago quarter. The growth was driven by the acquisitions of Biz Stain Fighter and Dryel, which closed on July 1, 2020, and by a rebound in sales of Batiste Dry Shampoo, where sales approached pre-COVID levels at the end of the first quarter.
Our net loss of $0.3 million was primarily driven by increases in cost of sales and selling expenses with our production and distribution partners. These expenditures were driven by COVID-related supply chain disruptions and product delays as we expedited raw materials and finished goods to keep product available to customers and end consumers.
About Scott’s Liquid Gold-Inc.
Scott's Liquid Gold-Inc. and its trusted brands have been a part of consumers' lives for over 70 years. Our products deliver high-quality, proven results that are supported by best-in-class consumer ratings and reviews. Our portfolio includes some of the most trusted and recognized consumer brand names, including our namesake Scott’s Liquid Gold wood care products, as well as Kids N Pets, Dryel, Biz Stain Fighter, Denorex, Prell, and Alpha Skin Care. We are also the American specialty channel distributor for Batiste Dry Shampoo.
SCOTT’S LIQUID GOLD-INC. & SUBSIDIARIES Consolidated Statements of Operations (in thousands, except per share data) |
|||||||
|
Three Months Ended |
||||||
|
March 31, |
||||||
|
2021 |
|
2020 |
||||
Net sales |
$ |
9,433 |
|
|
$ |
7,854 |
|
Cost of sales |
|
5,296 |
|
|
|
4,390 |
|
Gross Profit |
|
4,137 |
|
|
|
3,464 |
|
Gross Margin |
|
43.9 |
% |
|
|
44.1 |
% |
|
|
|
|
|
|
||
Operating expenses: |
|
|
|
|
|
||
Advertising |
|
159 |
|
|
|
221 |
|
Selling |
|
2,551 |
|
|
|
1,589 |
|
General and administrative |
|
1,285 |
|
|
|
1,194 |
|
Intangible asset amortization |
|
388 |
|
|
|
210 |
|
Total operating expenses |
|
4,383 |
|
|
|
3,214 |
|
(Loss) income from operations |
|
(246 |
) |
|
|
250 |
|
|
|
|
|
|
|
||
Interest income |
|
- |
|
|
|
1 |
|
Interest expense |
|
(134 |
) |
|
|
(4 |
) |
(Loss) income before income taxes |
|
(380 |
) |
|
|
247 |
|
Income tax benefit |
|
100 |
|
|
|
30 |
|
Net (loss) income |
$ |
(280 |
) |
|
$ |
277 |
|
|
|
|
|
|
|
||
Net (loss) income per common share |
|
|
|
|
|
||
Basic |
$ |
(0.02 |
) |
|
$ |
0.02 |
|
Diluted |
$ |
(0.02 |
) |
|
$ |
0.02 |
|
Weighted average shares outstanding |
|
|
|
|
|
||
Basic |
|
12,618 |
|
|
|
12,462 |
|
Diluted |
|
12,618 |
|
|
|
12,608 |
|
SCOTT’S LIQUID GOLD-INC. & SUBSIDIARIES Consolidated Balance Sheets (in thousands, except par value amounts) |
|||||||
|
March 31, |
|
|
December 31, |
|
||
|
2021 |
|
|
2020 |
|
||
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
Cash and cash equivalents |
$ |
1 |
|
|
$ |
5 |
|
Accounts receivable, net |
|
5,372 |
|
|
|
4,512 |
|
Inventories, net |
|
4,726 |
|
|
|
3,988 |
|
Income taxes receivable |
|
535 |
|
|
|
535 |
|
Prepaid expenses |
|
562 |
|
|
|
596 |
|
Other current assets |
|
- |
|
|
|
112 |
|
Total current assets |
|
11,196 |
|
|
|
9,748 |
|
|
|
|
|
|
|
|
|
Property and equipment, net |
|
15 |
|
|
|
18 |
|
Deferred tax asset |
|
881 |
|
|
|
784 |
|
Goodwill |
|
5,280 |
|
|
|
5,280 |
|
Intangible assets, net |
|
14,302 |
|
|
|
14,703 |
|
Operating lease right-of-use assets |
|
2,922 |
|
|
|
2,985 |
|
Other assets |
|
38 |
|
|
|
38 |
|
Total assets |
$ |
34,634 |
|
|
$ |
33,556 |
|
|
|
|
|
|
|
|
|
Liabilities and Shareholders’ Equity |
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
Accounts payable |
$ |
3,197 |
|
|
$ |
1,799 |
|
Accrued expenses |
|
558 |
|
|
|
296 |
|
Current portion of long-term debt |
|
1,000 |
|
|
|
1,000 |
|
Operating lease liabilities, current portion |
|
247 |
|
|
|
249 |
|
Other current liabilities |
|
67 |
|
|
|
67 |
|
Total current liabilities |
|
5,069 |
|
|
|
3,411 |
|
|
|
|
|
|
|
|
|
Long-term debt, net of current portion and debt issuance costs |
|
4,220 |
|
|
|
4,521 |
|
Operating lease liabilities, net of current |
|
2,970 |
|
|
|
3,032 |
|
Other liabilities |
|
121 |
|
|
|
127 |
|
Total liabilities |
|
12,380 |
|
|
|
11,091 |
|
|
|
|
|
|
|
|
|
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 12,618 shares (2021) and 12,618 shares (2020) |
|
1,262 |
|
|
|
1,262 |
|
Capital in excess of par |
|
7,702 |
|
|
|
7,633 |
|
Retained earnings |
|
13,290 |
|
|
|
13,570 |
|
Total shareholders’ equity |
|
22,254 |
|
|
|
22,465 |
|
Total liabilities and shareholders’ equity |
$ |
34,634 |
|
|
$ |
33,556 |
|
SCOTT’S LIQUID GOLD-INC. & SUBSIDIARIES Consolidated Statements of Cash Flows (in thousands) |
|||||||
|
Three Months Ended |
||||||
|
March 31, |
||||||
|
2021 |
|
2020 |
||||
Cash flows from operating activities: |
|
|
|
|
|
||
Net (loss) income |
$ |
(280 |
) |
|
$ |
277 |
|
Adjustments to reconcile net (loss) income to net cash provided (used) by operating activities: |
|
|
|
|
|
||
Depreciation and amortization |
|
453 |
|
|
|
229 |
|
Stock-based compensation |
|
69 |
|
|
|
36 |
|
Deferred income taxes |
|
(97 |
) |
|
|
107 |
|
Change in operating assets and liabilities, net of the effects of acquisitions: |
|
|
|
|
|
||
Accounts receivable |
|
(860 |
) |
|
|
(951 |
) |
Inventories |
|
(738 |
) |
|
|
429 |
|
Prepaid expenses and other assets |
|
146 |
|
|
|
93 |
|
Income taxes receivable |
|
- |
|
|
|
(39 |
) |
Accounts payable, accrued expenses, and other liabilities |
|
1,653 |
|
|
|
(768 |
) |
Total adjustments to net loss |
|
626 |
|
|
|
(864 |
) |
Net cash provided by (used in) operating activities |
|
346 |
|
|
|
(587 |
) |
|
|
|
|
|
|
||
Cash flows from investing activities: |
|
|
|
|
|
||
Proceeds from sale of property and equipment |
|
- |
|
|
|
500 |
|
Purchase of property and equipment |
|
- |
|
|
|
(17 |
) |
Net cash provided by investing activities |
|
- |
|
|
|
483 |
|
|
|
|
|
|
|
||
Cash flows from financing activities: |
|
|
|
|
|
||
Proceeds from revolving credit facility |
|
8,730 |
|
|
|
- |
|
Repayments of revolving credit facility |
|
(8,830 |
) |
|
|
- |
|
Repayments of term loan |
|
(250 |
) |
|
|
- |
|
Payments for debt issuance costs |
|
- |
|
|
|
(64 |
) |
Net cash used in financing activities |
|
(350 |
) |
|
|
(64 |
) |
|
|
|
|
|
|
||
Net decrease in cash and cash equivalents |
|
(4 |
) |
|
|
(168 |
) |
|
|
|
|
|
|
||
Cash and cash equivalents, beginning of period |
|
5 |
|
|
|
1,094 |
|
Cash and cash equivalents, end of period |
$ |
1 |
|
|
$ |
926 |
|
|
|
|
|
|
|
||
Supplemental disclosures: |
|
|
|
|
|
||
Cash paid during the period for interest |
$ |
86 |
|
|
$ |
4 |
|
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, 2020 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/20210514005548/en/
Contacts
Investor Relations Contact:
Kevin Paprzycki, CFO
303.576.6032
