Financial News
CORRECTING and REPLACING Scott’s Liquid Gold-Inc. Reports Second Quarter Results
Second Quarter 2022 Highlights:
- Second quarter 2022 net sales of $5.4 million vs. $7.8 million in 2021, including $6.5 million of same brand net sales* in 2021
- Net loss of $4.3 million in Q2 2022 vs. $1.1 million in 2021
- Adjusted loss from operations* of $0.6 million in Q2 2022 and Q2 2021
- Generated operating cash flow of $0.5 million
In the press release dated August 12, 2022, Scott’s Liquid Gold-Inc. did not provide additional information and reconciliations related to non-GAAP financial measures. Please replace the release with the following corrected version.
The updated release reads:
SCOTT’S LIQUID GOLD-INC. REPORTS SECOND QUARTER RESULTS
Second Quarter 2022 Highlights:
- Second quarter 2022 net sales of $5.4 million vs. $7.8 million in 2021, including $6.5 million of same brand net sales* in 2021
- Net loss of $4.3 million in Q2 2022 vs. $1.1 million in 2021
- Adjusted loss from operations* of $0.6 million in Q2 2022 and Q2 2021
- Generated operating cash flow of $0.5 million
Scott’s Liquid Gold-Inc. (OTC: SLGD) today announced results for the three months ended June 30, 2022.
Second Quarter Financial Results
In the second quarter of 2022, net sales decreased primarily due to the sale of the Dryel brand and the conclusion of our agreement to distribute Batiste products. BIZ sales declined due to continued supply chain disruptions related to our powder booster products. Sales of our Alpha Skin Care products destined for the China market decreased, and subsequent to quarter-end we terminated our relationship with our exclusive distributor in China and commenced a new go-to-market strategy in that region.
Our net loss of $4.3 million was primarily driven by the $3.6 million impairment of goodwill and intangible assets related to our Kids N Pets and Messy Pet product lines.
Despite the decreased sales levels compared to a year ago, our adjusted loss from operations* remained consistent between the second quarter of 2022 versus the same period in 2021 due to various improvements to our cost structure.
Management Commentary
"Despite a challenging operating environment, we remain committed to maximizing our value proposition for consumers across our entire portfolio of brands,” said Tisha Pedrazzini, President of Scott’s. “We have reduced overhead and continue to optimize and simplify our production and logistics networks. While inflation and supply chain shortages in select products continue to be a headwind, we continue to pursue marketing strategies that drive conversion while reducing expenditures and providing our customers the value that they have come to count on from Scott’s.”
*Indicates a non-GAAP financial measure. Please refer to “Exhibit 1 – Non-GAAP Financial Measures” later in this release for definitions of non-GAAP financial measures and a reconciliation of these non-GAAP financial measures to the related GAAP measures.
SCOTT’S LIQUID GOLD-INC. & SUBSIDIARIES
Consolidated Statements of Operations (in thousands, except per share data) |
|||||||||||||||
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Three months ended |
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Six Months Ended |
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June 30, |
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June 30, |
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||||||||||
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2022 |
|
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2021 |
|
|
2022 |
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|
2021 |
|
||||
Net sales |
$ |
5,383 |
|
|
$ |
7,769 |
|
|
$ |
11,172 |
|
|
$ |
16,613 |
|
Cost of sales |
|
3,108 |
|
|
|
4,662 |
|
|
|
5,978 |
|
|
|
9,525 |
|
Gross profit |
|
2,275 |
|
|
|
3,107 |
|
|
|
5,194 |
|
|
|
7,088 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Advertising |
|
174 |
|
|
|
203 |
|
|
|
326 |
|
|
|
362 |
|
Selling |
|
1,844 |
|
|
|
2,392 |
|
|
|
4,061 |
|
|
|
4,801 |
|
General and administrative |
|
698 |
|
|
|
1,687 |
|
|
|
1,444 |
|
|
|
2,972 |
|
Intangible asset amortization |
|
121 |
|
|
|
264 |
|
|
|
226 |
|
|
|
529 |
|
Impairment of goodwill and intangible assets |
|
3,589 |
|
|
|
- |
|
|
|
3,589 |
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|
|
- |
|
Total operating expenses |
|
6,426 |
|
|
|
4,546 |
|
|
|
9,646 |
|
|
|
8,664 |
|
Loss from operations |
|
(4,151 |
) |
|
|
(1,439 |
) |
|
|
(4,452 |
) |
|
|
(1,576 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
(130 |
) |
|
|
(76 |
) |
|
|
(280 |
) |
|
|
(110 |
) |
Loss before income taxes and discontinued operations |
|
(4,281 |
) |
|
|
(1,515 |
) |
|
|
(4,732 |
) |
|
|
(1,686 |
) |
Income tax (expense) benefit |
|
(52 |
) |
|
|
400 |
|
|
|
(52 |
) |
|
|
445 |
|
Loss from continuing operations |
|
(4,333 |
) |
|
|
(1,115 |
) |
|
|
(4,784 |
) |
|
|
(1,241 |
) |
Income (loss) from discontinued operations, net of taxes |
|
- |
|
|
|
49 |
|
|
|
- |
|
|
|
(105 |
) |
Net loss |
$ |
(4,333 |
) |
|
$ |
(1,066 |
) |
|
$ |
(4,784 |
) |
|
$ |
(1,346 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Basic and diluted net loss per common shares: |
|
|
|
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|
|
|
|
|
|
|
|
|
|
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Loss from continuing operations |
$ |
(0.34 |
) |
|
$ |
(0.08 |
) |
|
$ |
(0.38 |
) |
|
$ |
(0.10 |
) |
Loss from discontinued operations |
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
(0.01 |
) |
Net loss |
$ |
(0.34 |
) |
|
$ |
(0.08 |
) |
|
$ |
(0.38 |
) |
|
$ |
(0.11 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Basic and diluted |
|
12,749 |
|
|
|
12,618 |
|
|
|
12,745 |
|
|
|
12,618 |
|
SCOTT’S LIQUID GOLD-INC. & SUBSIDIARIES
Consolidated Balance Sheets (in thousands, except par value amounts) |
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June 30, |
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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 |
$ |
66 |
|
|
$ |
770 |
|
Restricted cash |
|
250 |
|
|
|
500 |
|
Accounts receivable, net |
|
1,693 |
|
|
|
3,516 |
|
Inventories |
|
5,842 |
|
|
|
5,677 |
|
Income taxes receivable |
|
275 |
|
|
|
320 |
|
Prepaid expenses |
|
293 |
|
|
|
436 |
|
Total current assets |
|
8,419 |
|
|
|
11,219 |
|
|
|
|
|
|
|
|
|
Property and equipment, net |
|
4 |
|
|
|
7 |
|
Goodwill |
|
838 |
|
|
|
1,710 |
|
Intangible assets, net |
|
2,359 |
|
|
|
5,160 |
|
Operating lease right-of-use assets |
|
2,614 |
|
|
|
2,735 |
|
Other assets |
|
38 |
|
|
|
38 |
|
Total assets |
$ |
14,272 |
|
|
$ |
20,869 |
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|
|
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Liabilities and Shareholders’ Equity |
|
|
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|
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|
Current liabilities: |
|
|
|
|
|
|
|
Accounts payable |
$ |
2,161 |
|
|
$ |
2,647 |
|
Accrued expenses |
|
626 |
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|
|
747 |
|
Current portion of long-term debt |
|
180 |
|
|
|
1,000 |
|
Operating lease liabilities, current portion |
|
259 |
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|
|
251 |
|
Total current liabilities |
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3,226 |
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|
4,645 |
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|
|
|
|
|
|
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Long-term debt, net of current portion and debt issuance costs |
|
1,528 |
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|
|
1,876 |
|
Operating lease liabilities, net of current |
|
2,649 |
|
|
|
2,780 |
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Other liabilities |
|
27 |
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|
|
27 |
|
Total liabilities |
|
7,430 |
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|
|
9,328 |
|
|
|
|
|
|
|
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Shareholders’ equity: |
|
|
|
|
|
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Preferred Stock, no par value, authorized 20,000 shares; no shares issued and outstanding |
|
- |
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|
|
- |
|
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 |
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Capital in excess of par |
|
7,872 |
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|
|
7,789 |
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(Accumulated deficit) retained earnings |
|
(2,305 |
) |
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|
2,479 |
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Total shareholders’ equity |
|
6,842 |
|
|
|
11,541 |
|
Total liabilities and shareholders’ equity |
$ |
14,272 |
$ |
20,869 |
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SCOTT’S LIQUID GOLD-INC. & SUBSIDIARIES
Consolidated Statements of Cash Flows (in thousands) |
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Six Months Ended |
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June 30, |
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2022 |
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|
2021 |
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Cash flows from operating activities: |
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|
|
|
|
|
|
Net loss |
$ |
(4,784 |
) |
|
$ |
(1,346 |
) |
Adjustments to reconcile net loss to net cash provided (used) by operating activities: |
|
|
|
|
|
|
|
Depreciation and amortization |
|
339 |
|
|
|
905 |
|
Stock-based compensation |
|
85 |
|
|
|
102 |
|
Deferred income taxes |
|
- |
|
|
|
(503 |
) |
Impairment of goodwill and intangible assets |
|
3,589 |
|
|
|
- |
|
Change in operating assets and liabilities: |
|
|
|
|
|
|
|
Accounts receivable |
|
1,823 |
|
|
|
(211 |
) |
Inventories |
|
(165 |
) |
|
|
(2,782 |
) |
Prepaid expenses and other assets |
|
143 |
|
|
|
166 |
|
Income taxes receivable |
|
45 |
|
|
|
22 |
|
Accounts payable, accrued expenses, and other liabilities |
|
(609 |
) |
|
|
2,942 |
|
Total adjustments to net loss |
|
5,250 |
|
|
|
641 |
|
Net cash provided by (used in) operating activities |
|
466 |
|
|
|
(705 |
) |
|
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
Purchase of software |
|
(142 |
) |
|
|
(113 |
) |
Net cash used in investing activities |
|
(142 |
) |
|
|
(113 |
) |
|
|
|
|
|
|
|
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Cash flows from financing activities: |
|
|
|
|
|
|
|
Repayments on term loans |
|
(2,000 |
) |
|
|
(500 |
) |
Proceeds from revolving credit facility |
|
14,737 |
|
|
|
19,517 |
|
Repayments of revolving credit facility |
|
(14,015 |
) |
|
|
(18,184 |
) |
Net cash (used in) provided by financing activities |
|
(1,278 |
) |
|
|
833 |
|
|
|
|
|
|
|
|
|
Net (decrease) increase in cash and restricted cash |
|
(954 |
) |
|
|
15 |
|
|
|
|
|
|
|
|
|
Cash and restricted cash, beginning of period |
|
1,270 |
|
|
|
5 |
|
Cash and restricted cash, end of period |
$ |
316 |
|
|
$ |
20 |
|
|
|
|
|
|
|
|
|
Supplemental disclosures: |
|
|
|
|
|
|
|
Cash paid during the period for interest |
$ |
170 |
|
|
$ |
212 |
|
Exhibit 1 – Non-GAAP Financial Measures
The following provides definitions and other information regarding the non-GAAP financial measures used in this press release which may not be the same as or comparable to similar measures presented by other companies:
- Same brand net sales: Measure of net sales excluding impacts of acquisitions, divestitures, and changes in distributor relationships from year over year comparisons. For the three months ended June 30, 2021, these sales exclude $1.2 million of net sales associated with the Batiste brand we no longer distribute and are summarized under the line item of ‘Excluded net sales’ in the table below for each period presented. Management believes this measure provides investors with a supplemental understanding of underlying sales trends by providing sales dollars on a consistent basis.
- Adjusted loss from operations: Loss from operations excluding the impact of certain costs that are not expected to be incurred on an ongoing basis in future operating periods. For the three months ended June 30, 2022, the costs excluded were impairment of goodwill and intangible assets of $3.6 million. For the three months ended June 30, 2021, the costs excluded were restructuring costs associated with separation of employees of $0.8 million. These items are summarized under the line item ‘Excluded costs’ in the table below for each period presented. Management believes this non-GAAP measure provides a supplemental perspective to the Company's operating efficiency over time.
We use these financial measures internally to evaluate segment and overall operating performance. While we believe that these financial measures are useful in evaluating our underlying business performance and trends, this information should be considered as supplemental in nature and is not meant to be considered in isolation or as a substitute for the related financial information prepared in accordance with GAAP.
SCOTT’S LIQUID GOLD-INC. & SUBSIDIARIES
Non-GAAP Reconciliations For the Three Months Ended June 30, 2022 and 2021 (in thousands) (Unaudited) |
|||||||
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|||||||
|
2022 |
|
|
2021 |
|
||
Same brand net sales |
|||||||
Net sales, GAAP |
$ |
5,383 |
|
$ |
7,769 |
|
|
Excluded net sales |
|
- |
|
|
(1,229 |
) |
|
Same brand net sales, non-GAAP |
$ |
5,383 |
|
$ |
6,540 |
|
|
|
2022 |
|
|
2021 |
|
||
Adjusted loss from operations |
|||||||
Loss from operations, GAAP |
$ |
(4,151 |
) |
$ |
(1,439 |
) |
|
Excluded costs |
|
3,589 |
|
|
805 |
|
|
Adjusted loss from operations, non-GAAP |
$ |
(562 |
) |
$ |
(634 |
) |
|
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.
View source version on businesswire.com: https://www.businesswire.com/news/home/20220812005075/en/
Contacts
Investor Relations Contact:
David Arndt
Chief Financial Officer
303.576.6027
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