Scott’s Liquid Gold-Inc. Reports Second Quarter Results

Second Quarter 2021 Results:

  • Net sales of $8.4 million vs. $6.1 million in 2020
  • Net loss of $1.1 million (($0.08) per share) driven by restructuring costs of $0.8 million and COVID-related supply chain impacts
  • Net cash used in operating activities of $1.0 million vs. net cash from operating activities of $5.1 million in 2020

 

Scott’s Liquid Gold-Inc. (OTC: SLGD) today announced operating results for the three months ended June 30, 2021.

“This is a transition year for Scott’s, and we continue to review all aspects of our business with an eye towards growth and profitability,” said Tisha Pedrazzini, Interim Co-President of Scott’s Liquid Gold. "We have identified several key brands that we aim to accelerate via new consumer messaging, brand packaging, and go-to-market strategies. Our portfolio is filled with products that consumers love, as evidenced by best-in-class ratings and reviews. We are working to drive increased awareness of these brands with new digital, social, and grassroots campaigns this fall.”

“While logistics and supply chain challenges impacted sales in the second quarter, we have rebuilt inventory and are back in stock on all major products,” said Kevin Paprzycki, Scott’s CFO and Interim Co-President. “We are taking actions to improve our profitability by reducing selling costs, reducing G&A expenses, and improving working capital efficiency, which we believe will start to be reflected in our financial results in the second half of the year. Given the inflationary backdrop, we have fine-tuned pricing and continue to work to be an efficient and easy partner with which to do business.”

Second Quarter Financial Results

In the second quarter of 2021, net sales increased 38% to $8.4 million compared to $6.1 million in the same period in 2020. The growth was driven by the BIZ and Dryel brands, which were acquired in July 2020, and by a rebound in Batiste sales in 2021, where the second quarter of 2020 was unfavorably impacted by COVID-19. Sales in the second quarter of 2021 were affected by supply chain shortages of cans, components, and other raw materials, particularly with our Scott’s Liquid Gold brand.

Our net loss of $1.1 million was primarily driven by one-time restructuring charges of $0.8 million from severance payments. In addition, our operating results were also affected by supply chain shortages of certain key products including our Scott’s Liquid Gold brand. We are also experiencing increases in costs of our products and logistics-related expenses, primarily driven by COVID-related supply chain disruptions and product delays.

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 current 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

 

 

Six Months Ended

 

 

June 30,

 

 

June 30,

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Net sales

$

8,451

 

 

$

6,083

 

 

$

17,884

 

 

$

13,937

 

Cost of sales

 

4,929

 

 

 

3,215

 

 

 

10,225

 

 

 

7,605

 

Gross Profit

 

3,522

 

 

 

2,868

 

 

 

7,659

 

 

 

6,332

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Advertising

 

203

 

 

 

141

 

 

 

362

 

 

 

362

 

Selling

 

2,518

 

 

 

1,614

 

 

 

5,069

 

 

 

3,203

 

General and administrative

 

1,687

 

 

 

1,293

 

 

 

2,972

 

 

 

2,487

 

Intangible asset amortization

 

387

 

 

 

210

 

 

 

775

 

 

 

420

 

Total operating expenses

 

4,795

 

 

 

3,258

 

 

 

9,178

 

 

 

6,472

 

(Loss) income from operations

 

(1,273

)

 

 

(390

)

 

 

(1,519

)

 

 

(140

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

-

 

 

 

2

 

 

 

-

 

 

 

3

 

Interest expense

 

(175

)

 

 

(74

)

 

 

(309

)

 

 

(78

)

Income from distribution agreement termination

 

-

 

 

 

350

 

 

 

-

 

 

 

350

 

(Loss) income before income taxes

 

(1,448

)

 

 

(112

)

 

 

(1,828

)

 

 

135

 

Income tax benefit

 

382

 

 

 

34

 

 

 

482

 

 

 

64

 

Net (loss) income

$

(1,066

)

 

$

(78

)

 

$

(1,346

)

 

$

199

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net (loss) income per common share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

$

(0.08

)

 

$

(0.01

)

 

$

(0.11

)

 

$

0.02

 

Diluted

$

(0.08

)

 

$

(0.01

)

 

$

(0.11

)

 

$

0.02

 

Weighted average shares outstanding

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

12,618

 

 

 

12,462

 

 

 

12,618

 

 

 

12,462

 

Diluted

 

12,618

 

 

 

12,462

 

 

 

12,618

 

 

 

12,571

 

SCOTT’S LIQUID GOLD-INC. & SUBSIDIARIES

Consolidated Balance Sheets

(in thousands, except par value amounts)

 

 

 

 

 

 

 

June 30,

 

 

December 31,

 

 

2021

 

 

2020

 

 

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

Cash and cash equivalents

$

20

 

 

$

5

 

Accounts receivable, net

 

4,723

 

 

 

4,512

 

Inventories, net

 

6,770

 

 

 

3,988

 

Income taxes receivable

 

513

 

 

 

535

 

Prepaid expenses

 

542

 

 

 

596

 

Other current assets

 

-

 

 

 

112

 

Total current assets

 

12,568

 

 

 

9,748

 

 

 

 

 

 

 

 

 

Property and equipment, net

 

12

 

 

 

18

 

Deferred tax asset

 

1,287

 

 

 

784

 

Goodwill

 

5,280

 

 

 

5,280

 

Intangible assets, net

 

14,014

 

 

 

14,703

 

Operating lease right-of-use assets

 

2,857

 

 

 

2,985

 

Other assets

 

38

 

 

 

38

 

Total assets

$

36,056

 

 

$

33,556

 

 

 

 

 

 

 

 

 

Liabilities and Shareholders’ Equity

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Accounts payable

$

4,036

 

 

$

1,799

 

Accrued expenses

 

999

 

 

 

296

 

Current portion of long-term debt

 

1,000

 

 

 

1,000

 

Operating lease liabilities, current portion

 

245

 

 

 

249

 

Other current liabilities

 

67

 

 

 

67

 

Total current liabilities

 

6,347

 

 

 

3,411

 

 

 

 

 

 

 

 

 

Long-term debt, net of current portion and debt issuance costs

 

5,451

 

 

 

4,521

 

Operating lease liabilities, net of current

 

2,908

 

 

 

3,032

 

Other liabilities

 

129

 

 

 

127

 

Total liabilities

 

14,835

 

 

 

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

 

7,735

 

 

 

7,633

 

Retained earnings

 

12,224

 

 

 

13,570

 

Total shareholders’ equity

 

21,221

 

 

 

22,465

 

Total liabilities and shareholders’ equity

$

36,056

 

 

$

33,556

 

SCOTT’S LIQUID GOLD-INC. & SUBSIDIARIES

Consolidated Statements of Cash Flows

(in thousands)

 

 

 

 

Six Months Ended

 

 

June 30,

 

 

2021

 

 

2020

 

Cash flows from operating activities:

 

 

 

 

 

 

 

Net (loss) income

$

(1,346

)

 

$

199

 

Adjustments to reconcile net (loss) income to net cash provided (used) by operating activities:

 

 

 

 

 

 

 

Depreciation and amortization

 

905

 

 

 

522

 

Stock-based compensation

 

102

 

 

 

71

 

Deferred income taxes

 

(503

)

 

 

65

 

Change in operating assets and liabilities:

 

 

 

 

 

 

 

Accounts receivable

 

(211

)

 

 

156

 

Inventories

 

(2,782

)

 

 

2,905

 

Prepaid expenses and other assets

 

166

 

 

 

42

 

Income taxes receivable

 

22

 

 

 

322

 

Accounts payable, accrued expenses, and other liabilities

 

2,942

 

 

 

296

 

Total adjustments to net (loss) income

 

641

 

 

 

4,379

 

Net cash (used) provided by operating activities

 

(705

)

 

 

4,578

 

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

Purchase of software

 

(113

)

 

 

-

 

Purchase of property and equipment

 

-

 

 

 

(17

)

Proceeds from sale of property and equipment

 

-

 

 

 

500

 

Cash paid for leasehold improvements

 

-

 

 

 

(247

)

Reimbursement of leasehold improvements

 

-

 

 

 

110

 

Net cash (used in) provided by investing activities

 

(113

)

 

 

346

 

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

Proceeds from revolving credit facility

 

19,517

 

 

 

-

 

Repayments of revolving credit facility

 

(18,184

)

 

 

-

 

Repayments of term loan

 

(500

)

 

 

-

 

Payments for debt issuance costs

 

-

 

 

 

(141

)

Proceeds from PPP loan

 

-

 

 

 

600

 

Repayment of PPP loan

 

-

 

 

 

(600

)

Net cash provided by (used in) financing activities

 

833

 

 

 

(141

)

 

 

 

 

 

 

 

 

Net increase in cash and cash equivalents

 

15

 

 

 

4,783

 

 

 

 

 

 

 

 

 

Cash and cash equivalents, beginning of period

 

5

 

 

 

1,094

 

Cash and cash equivalents, end of period

$

20

 

 

$

5,877

 

 

 

 

 

 

 

 

 

Supplemental disclosures:

 

 

 

 

 

 

 

Cash paid during the period for interest

$

212

 

 

$

-

 

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.

Contacts

Investor Relations Contact:

Kevin Paprzycki

Interim Co-President & CFO

303.576.6032

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