First Quarter 2022 Highlights:
- First quarter 2022 net sales of $5.8 million vs. $9.4 million in 2021
- Net loss of $0.5 million in Q1 2022 vs. $0.3 million in 2021
Scott’s Liquid Gold-Inc. (OTC: SLGD) today announced results for the three months ended March 31, 2022.
First Quarter Financial Results
In the first quarter of 2022, net sales decreased due to the sale of the Dryel brand and the conclusion of our agreement to distribute Batiste products, which collectively represented $2.5 million in sales in the first quarter of 2021. BIZ sales declined due to supply chain issues with our powder booster products. Sales of our Alpha Skin Care products decreased due to the lockdowns in China, which impacted our ability to export those products. Our Kids N Pets and Messy Pet brands experienced slight increases in sales versus the first quarter of 2021 due to targeted marketing efforts.
Our net loss of $0.5 million was primarily driven by amortization of intangible assets, interest expense, and continued inflationary impacts associated with the manufacture and distribution of our products. In addition to high logistics-related expenses, the rising cost of fuel negatively impacted our inbound and outbound transportation rates.
Management Commentary
“We are proud of our team for their efforts to help mitigate the volatile and challenging environment,” said Tisha Pedrazzini, President of Scott’s. “While inflation continues to impact operating costs and supply chain remains uncertain, we’ve launched new line extensions that we believe set the foundation to deliver on our future growth plans. We continue to focus on both sales growth initiatives and cost structure efficiencies to drive profit improvements in the short and long term.”
SCOTT’S LIQUID GOLD-INC. & SUBSIDIARIES Consolidated Statements of Operations (in thousands, except per share data) |
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Three Months Ended March 31, |
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2022 |
|
|
2021 |
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Net sales |
$ |
5,790 |
|
|
$ |
8,844 |
|
Cost of sales |
|
2,856 |
|
|
|
4,840 |
|
Gross Profit |
|
2,934 |
|
|
|
4,004 |
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
Advertising |
|
135 |
|
|
|
159 |
|
Selling |
|
2,204 |
|
|
|
2,415 |
|
General and administrative |
|
791 |
|
|
|
1,285 |
|
Intangible asset amortization |
|
105 |
|
|
|
265 |
|
Total operating expenses |
|
3,235 |
|
|
|
4,124 |
|
Loss from operations |
|
(301 |
) |
|
|
(120 |
) |
|
|
|
|
|
|
|
|
Interest expense |
|
(150 |
) |
|
|
(35 |
) |
Loss before income taxes and discontinued operations |
|
(451 |
) |
|
|
(155 |
) |
Income tax benefit |
|
- |
|
|
|
41 |
|
Loss from continuing operations |
|
(451 |
) |
|
|
(114 |
) |
Loss from discontinued operations, net of taxes |
|
- |
|
|
|
(166 |
) |
Net loss |
$ |
(451 |
) |
|
$ |
(280 |
) |
|
|
|
|
|
|
|
|
Basic and diluted net loss per common shares: |
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|
|
|
|
|
|
Loss from continuing operations |
$ |
(0.04 |
) |
|
$ |
(0.01 |
) |
Loss from discontinued operations |
$ |
- |
|
|
$ |
(0.01 |
) |
Net loss |
$ |
(0.04 |
) |
|
$ |
(0.02 |
) |
|
|
|
|
|
|
|
|
Weighted average shares outstanding: |
|
|
|
|
|
|
|
Basic and diluted |
12,739 |
|
|
|
12,618 |
|
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SCOTT’S LIQUID GOLD-INC. & SUBSIDIARIES Consolidated Balance Sheets (in thousands, except par value amounts) |
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March 31, |
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December 31, |
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2022 |
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2021 |
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Assets |
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|
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|
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Current assets: |
|
|
|
|
|
|
|
Cash |
$ |
22 |
|
|
$ |
770 |
|
Restricted cash |
|
375 |
|
|
|
500 |
|
Accounts receivable, net |
|
2,399 |
|
|
|
3,516 |
|
Inventories |
|
6,174 |
|
|
|
5,677 |
|
Income taxes receivable |
|
320 |
|
|
|
320 |
|
Prepaid expenses |
|
422 |
|
|
|
436 |
|
Total current assets |
|
9,712 |
|
|
|
11,219 |
|
|
|
|
|
|
|
|
|
Property and equipment, net |
|
5 |
|
|
|
7 |
|
Goodwill |
|
1,710 |
|
|
|
1,710 |
|
Intangible assets, net |
|
5,153 |
|
|
|
5,160 |
|
Operating lease right-of-use assets |
|
2,675 |
|
|
|
2,735 |
|
Other assets |
|
38 |
|
|
|
38 |
|
Total assets |
$ |
19,293 |
|
|
$ |
20,869 |
|
|
|
|
|
|
|
|
|
Liabilities and Shareholders’ Equity |
|
|
|
|
|
|
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Current liabilities: |
|
|
|
|
|
|
|
Accounts payable |
$ |
2,289 |
|
|
$ |
2,647 |
|
Accrued expenses |
|
693 |
|
|
|
747 |
|
Current portion of long-term debt |
|
840 |
|
|
|
1,000 |
|
Operating lease liabilities, current portion |
|
259 |
|
|
|
251 |
|
Total current liabilities |
|
4,081 |
|
|
|
4,645 |
|
|
|
|
|
|
|
|
|
Long-term debt, net of current portion and debt issuance costs |
|
1,321 |
|
|
|
1,876 |
|
Operating lease liabilities, net of current |
|
2,711 |
|
|
|
2,780 |
|
Other liabilities |
|
27 |
|
|
|
27 |
|
Total liabilities |
|
8,140 |
|
|
|
9,328 |
|
|
|
|
|
|
|
|
|
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 12,749 shares (2022) and 12,727 shares (2021) |
|
1,275 |
|
|
|
1,273 |
|
Capital in excess of par |
|
7,850 |
|
|
|
7,789 |
|
Retained earnings |
|
2,028 |
|
|
|
2,479 |
|
Total shareholders’ equity |
|
11,153 |
|
|
|
11,541 |
|
Total liabilities and shareholders’ equity |
$ |
19,293 |
|
|
$ |
20,869 |
|
SCOTT’S LIQUID GOLD-INC. & SUBSIDIARIES Consolidated Statements of Cash Flows (in thousands) |
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March 31, |
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2022 |
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|
2021 |
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Cash flows from operating activities: |
|
|
|
|
|
|
|
Net loss |
$ |
(451 |
) |
|
$ |
(280 |
) |
Adjustments to reconcile net loss to net cash (used) provided by operating activities: |
|
|
|
|
|
|
|
Depreciation and amortization |
|
164 |
|
|
|
453 |
|
Stock-based compensation |
|
63 |
|
|
|
69 |
|
Deferred income taxes |
|
- |
|
|
|
(97 |
) |
Change in operating assets and liabilities: |
|
|
|
|
|
|
|
Accounts receivable |
|
1,117 |
|
|
|
(860 |
) |
Inventories |
|
(497 |
) |
|
|
(738 |
) |
Prepaid expenses and other assets |
|
14 |
|
|
|
146 |
|
Accounts payable, accrued expenses, and other liabilities |
|
(414 |
) |
|
|
1,653 |
|
Total adjustments to net loss |
|
447 |
|
|
|
626 |
|
Net cash (used) provided by operating activities |
|
(4 |
) |
|
|
346 |
|
|
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
Purchase of software |
|
(99 |
) |
|
|
- |
|
Net cash used in investing activities |
|
(99 |
) |
|
|
- |
|
|
|
|
|
|
|
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Cash flows from financing activities: |
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|
|
|
|
|
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Proceeds from revolving credit facility |
|
8,379 |
|
|
|
8,730 |
|
Repayments of revolving credit facility |
|
(7,899 |
) |
|
|
(8,830 |
) |
Repayments of term loan |
|
(1,250 |
) |
|
|
(250 |
) |
Net cash used in financing activities |
|
(770 |
) |
|
|
(350 |
) |
|
|
|
|
|
|
|
|
Net decrease in cash |
|
(873 |
) |
|
|
(4 |
) |
|
|
|
|
|
|
|
|
Cash and restricted cash, beginning of period |
|
1,270 |
|
|
|
5 |
|
Cash and restricted cash, end of period |
$ |
397 |
|
|
$ |
1 |
|
|
|
|
|
|
|
|
|
Cash and restricted cash, end of period associated with discontinued operations |
$ |
- |
|
|
$ |
- |
|
Cash and restricted cash, end of period associated with continuing operations |
$ |
397 |
|
|
$ |
1 |
|
|
|
|
|
|
|
|
|
Supplemental disclosures: |
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|
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Cash paid during the period for interest |
$ |
95 |
|
|
$ |
86 |
|
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, 2021 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.
About Scott’s Liquid Gold-Inc.
Scott’s Liquid Gold-Inc. (SLG-Inc.) is a leading manufacturer and marketer of consumer products sold nationally and internationally to retail channels over the last 70 years. SLG-Inc. markets and distributes some of the most trusted and recognized consumer brand names, including its namesake wood cleaning products; Alpha Skin Care®; Kids N Pets®; Messy Pet®; BIZ®; Denorex®; Prell® and other brands.
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Contacts
David Arndt
Chief Financial Officer
303.576.6027
