Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2020 | Nov. 02, 2020 | |
Cover [Abstract] | ||
Entity Registrant Name | Scott's Liquid Gold - Inc. | |
Entity Central Index Key | 0000088000 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2020 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q3 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Common Stock, Shares Outstanding | 12,612,963 | |
Entity Interactive Data Current | Yes | |
Entity Shell Company | false | |
Entity File Number | 001-13458 | |
Entity Incorporation, State or Country Code | CO | |
Entity Tax Identification Number | 84-0920811 | |
Entity Address, Address Line One | 8400 E. Crescent Parkway | |
Entity Address, Address Line Two | Suite 450 | |
Entity Address, City or Town | Greenwood Village | |
Entity Address, State or Province | CO | |
Entity Address, Postal Zip Code | 80111 | |
City Area Code | (303) | |
Local Phone Number | 373-4860 | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Entity Current Reporting Status | Yes |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Income Statement [Abstract] | ||||
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 |
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 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
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 | 217 | 705 |
Property and equipment held for sale | 500 | |
Prepaid expenses | 701 | 368 |
Other current assets | 71 | |
Total current assets | 11,290 | 13,274 |
Property and equipment, net | 129 | 124 |
Deferred tax asset | 582 | 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 |
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 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2020 | Dec. 31, 2019 |
Statement Of Financial Position [Abstract] | ||
Preferred stock, par value | $ 0 | $ 0 |
Preferred stock, shares authorized | 20,000,000 | 20,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock par value | $ 0.10 | $ 0.10 |
Common stock, shares authorized | 50,000,000 | 50,000,000 |
Common stock, shares issued | 12,513,000 | 12,462,000 |
Common stock, shares outstanding | 12,513,000 | 12,462,000 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Shareholders' Equity - USD ($) shares in Thousands, $ in Thousands | Total | Common Stock | Capital in Excess of Par | Retained Earnings |
Beginning Balance, Value at Dec. 31, 2018 | $ 24,082 | $ 1,241 | $ 7,063 | $ 15,778 |
Beginning Balance, Shares at Dec. 31, 2018 | 12,408 | 12,408 | ||
Stock-based compensation, Value | $ 42 | 42 | ||
Net income (loss) | (330) | (330) | ||
Ending Balance, Value at Mar. 31, 2019 | 23,794 | $ 1,241 | 7,105 | 15,448 |
Ending Balance, Shares at Mar. 31, 2019 | 12,408 | |||
Beginning Balance, Value at Dec. 31, 2018 | $ 24,082 | $ 1,241 | 7,063 | 15,778 |
Beginning Balance, Shares at Dec. 31, 2018 | 12,408 | 12,408 | ||
Net income (loss) | $ (659) | |||
Ending Balance, Value at Sep. 30, 2019 | 23,585 | $ 1,246 | 7,220 | 15,119 |
Ending Balance, Shares at Sep. 30, 2019 | 12,462 | |||
Beginning Balance, Value at Mar. 31, 2019 | 23,794 | $ 1,241 | 7,105 | 15,448 |
Beginning Balance, Shares at Mar. 31, 2019 | 12,408 | |||
Stock-based compensation, Value | 42 | 42 | ||
Stock options exercised | 41 | $ 5 | 36 | |
Stock options exercised, Shares | 51 | |||
Net income (loss) | (716) | (716) | ||
Ending Balance, Value at Jun. 30, 2019 | $ 23,161 | $ 1,246 | 7,183 | 14,732 |
Ending Balance, Shares at Jun. 30, 2019 | 12,460 | 12,459 | ||
Stock-based compensation, Value | $ 35 | 35 | ||
Stock options exercised | 2 | 2 | ||
Stock options exercised, Shares | 3 | |||
Net income (loss) | 387 | 387 | ||
Ending Balance, Value at Sep. 30, 2019 | 23,585 | $ 1,246 | 7,220 | 15,119 |
Ending Balance, Shares at Sep. 30, 2019 | 12,462 | |||
Beginning Balance, Value at Dec. 31, 2019 | $ 23,617 | $ 1,246 | 7,250 | 15,121 |
Beginning Balance, Shares at Dec. 31, 2019 | 12,462 | 12,462 | ||
Stock-based compensation, Value | $ 36 | 36 | ||
Net income (loss) | 277 | 277 | ||
Ending Balance, Value at Mar. 31, 2020 | 23,930 | $ 1,246 | 7,286 | 15,398 |
Ending Balance, Shares at Mar. 31, 2020 | 12,462 | |||
Beginning Balance, Value at Dec. 31, 2019 | $ 23,617 | $ 1,246 | 7,250 | 15,121 |
Beginning Balance, Shares at Dec. 31, 2019 | 12,462 | 12,462 | ||
Net income (loss) | $ (318) | |||
Ending Balance, Value at Sep. 30, 2020 | $ 23,472 | $ 1,251 | 7,418 | 14,803 |
Ending Balance, Shares at Sep. 30, 2020 | 12,513 | 12,513 | ||
Beginning Balance, Value at Mar. 31, 2020 | $ 23,930 | $ 1,246 | 7,286 | 15,398 |
Beginning Balance, Shares at Mar. 31, 2020 | 12,462 | |||
Stock-based compensation, Value | 35 | 35 | ||
Net income (loss) | (78) | (78) | ||
Ending Balance, Value at Jun. 30, 2020 | $ 23,887 | $ 1,246 | 7,321 | 15,320 |
Ending Balance, Shares at Jun. 30, 2020 | 12,462 | 12,462 | ||
Stock-based compensation, Value | $ 35 | 35 | ||
Stock options exercised | 67 | $ 5 | 62 | |
Stock options exercised, Shares | 51 | |||
Net income (loss) | (517) | (517) | ||
Ending Balance, Value at Sep. 30, 2020 | $ 23,472 | $ 1,251 | $ 7,418 | $ 14,803 |
Ending Balance, Shares at Sep. 30, 2020 | 12,513 | 12,513 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 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 | (26) | (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 | 488 | 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 |
Organization and Summary of Sig
Organization and Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Organization and Summary of Significant Accounting Policies | Note 1. Organization and Summary of Significant Accounting Policies (a) Company Background Scott’s Liquid Gold-Inc., a Colorado corporation was incorporated on February 15, 1954. Scott’s Liquid Gold-Inc. and its wholly-owned subsidiaries (collectively, the “Company,” “we,” “our,” or “us”) develop, market and sell quality household and personal care products. We are also a distributor in the United States of personal care products manufactured by another company. Our business is comprised of two segments: household products and personal care products. (b) Principles of Consolidation Our Condensed Consolidated Financial Statements include our accounts and those of our wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated. (c) Basis of Presentation The unaudited Condensed Consolidated Statements of Operations, Condensed Consolidated Balance Sheets, and Condensed Consolidated Statements of Cash Flows included in this Report have been prepared by the Company. In our opinion, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position at September 30, 2020 and results of operations and cash flows for all periods have been made. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). These Condensed Consolidated Financial Statements should be read in conjunction with our financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2019. The results of operations for the period ended September 30, 2020 are not necessarily indicative of the operating results for the full year. (d) Use of Estimates The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts in our financial statements of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include, but are not limited to, the realization of deferred tax assets, reserves for slow moving and obsolete inventory, customer returns and allowances, intangible asset useful lives and amortization method, fair value of assets acquired in business combinations, operating lease right-of-use assets and operating lease liabilities, and stock-based compensation. Actual results could differ from our estimates. (e) Cash Equivalents We consider all highly liquid investments with an original maturity of three months or less at the date of acquisition to be cash equivalents. (f) Inventories Valuation and Reserves Inventories consist of raw materials and finished goods and are stated at the lower of cost (first-in, first-out method) or net realizable value, which is defined as the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. We estimate an inventory reserve, which is generally not material to our financial statements, for slow moving and obsolete products and raw materials based upon, among other things, an assessment of historical and anticipated sales of our products. In the event that actual results differ from our estimates, the results of future periods may be impacted. Inventories were comprised of the following at: September 30, 2020 December 31, 2019 Finished goods $ 4,621 $ 5,730 Raw materials 1,203 2,218 Inventory reserve for obsolescence (77 ) (107 ) $ 5,747 $ 7,841 Our remaining raw materials balance is to be sold to contract manufacturing partners based on production demand. (g) Property and Equipment Property and equipment are recorded at historical cost. Depreciation is provided using the straight-line method over the estimated useful lives of the assets ranging from three to 20 years. Production equipment and production support equipment are estimated to have useful lives of 15 to 20 years and three to 10 years, respectively. Office furniture and office machines are estimated to have useful lives of 10 to 20 years and three to five years, respectively. Maintenance and repairs are expensed as incurred. Improvements that extend the useful lives of the asset or provide improved efficiency are capitalized. (h) Leases Lease assets and lease liabilities are recognized at the commencement of an arrangement where it is determined at inception that a lease exists. Lease assets represent the right to use an underlying asset for the lease term, and lease liabilities represent the obligation to make lease payments arising from the lease. These assets and liabilities are initially recognized based on the present value of lease payments over the lease term calculated using our incremental borrowing rate generally applicable to the location of the lease asset, unless the implicit rate is readily determinable. Lease terms include options to extend or terminate the lease when it is reasonably certain that those options will be exercised. Certain nonlease components, such as maintenance and other services provided by the lessor, are included in the valuation of the lease. Leases with an initial term of 12 months or less, which are not material to our financial statements, are not recorded on the balance sheet, and the expense for these short-term leases and for operating leases is recognized on a straight-line basis over the lease term. Lease agreements with lease and nonlease components are combined as a single lease component. The Company evaluates reimbursable leasehold improvements based on whether improvements are indicative of a lessor or lessee asset. The Company concluded that all of its reimbursable leasehold improvement payments have qualified as lessor assets and, as such, have accounted for leasehold improvement payments as prepaid rent included in prepaid expenses on the condensed consolidated balance sheets. ( i ) Intangible Assets and Goodwill Intangible assets consist of customer relationships, trade names, formulas, batching processes, internal-use software and a non-compete agreement. The fair value of the intangible assets is amortized over their estimated useful lives and range from a period of five to 25 years. Goodwill consists of the excess of the purchase price over the fair value of tangible and identifiable intangible assets acquired. Internal-use software costs recognized as an intangible asset relates to capitalizable costs of computer software obtained for internal-use as defined by the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 350-40-30-1. All other internal-use software costs are expensed as incurred by the Company. Amortization is recorded straight-line over the estimated useful life of the software once the software is ready for its intended use. As of September 30, 2020, our internal-use software was not ready for its intended use. The estimated useful life for internal-use software will be determined and periodically reassessed based on considerations for obsolescence, technology, competition, and other economic factors. Goodwill and intangible assets deemed to have indefinite lives are not amortized but are subject to annual impairment tests, and in certain circumstances these assets are written down to fair value if impaired. ( j ) Financial Instruments Financial instruments which potentially subject us to concentrations of credit risk include cash and cash equivalents and accounts receivable. We maintain our cash balances in the form of bank demand deposits with financial institutions that we believe are creditworthy. Historically, we have maintained balances in various operating accounts in excess of federally insured limits. We establish an allowance for doubtful accounts, which is generally not material to our financial statements, based upon factors surrounding the credit risk of specific customers, historical trends and other information. We have no significant financial instruments with off-balance sheet risk of accounting loss, such as foreign exchange contracts, option contracts or other foreign currency hedging arrangements. The recorded amounts for cash and cash equivalents, receivables, other current assets, accounts payable, and accrued expenses approximate fair value due to the short-term nature of these financial instruments. (k) Purchase Accounting for Acquisitions We apply the acquisition method of accounting for a business combination. In general, this methodology requires us to record assets acquired and liabilities assumed at their respective fair values at the date of acquisition. Any amount of the purchase price paid that is in excess of the estimated fair value of the net assets acquired is recorded as goodwill. For certain acquisitions, we also record a liability for contingent consideration based on estimated future business performance. We monitor our assumptions surrounding these estimated future cash flows and, if there is a significant change, would record an adjustment to the contingent consideration liability and a corresponding adjustment to either income or expense. We determine fair value using widely accepted valuation techniques, primarily discounted cash flow and market multiple analyses. These types of analyses require us to make assumptions and estimates regarding industry and economic factors, the profitability of future business strategies, discount rates and cash flow. If actual results are not consistent with our assumptions and estimates, or our assumptions and estimates change due to new information, we may be exposed to an impairment charge in the future. If the contingent consideration paid for any of our acquisitions differs from the amount initially recorded, we would record either income or expense associated with the change in liability. ( l ) Income Taxes Income taxes reflect the tax effects of transactions reported in the Condensed Consolidated Financial Statements and consist of taxes currently payable plus deferred income taxes related to certain income and expenses recognized in different periods for financial and income tax reporting purposes. Deferred income tax assets and liabilities are recognized for the future income tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective income tax bases. A valuation allowance is established when it is more-likely-than-not that some portion or all of a deferred tax asset will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the period in which related temporary differences become deductible. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Taxes are reported based on tax positions that meet a more-likely-than-not standard and that are measured at the amount that is more-likely-than-not to be realized. Differences between financial and tax reporting which do not meet this threshold are required to be recorded as unrecognized tax benefits or expense. We classify penalty and interest expense related to income tax liabilities as an income tax expense. There are no significant interest and penalties recognized in the Condensed Consolidated Statements of Income or accrued on the Condensed Consolidated Balance Sheets. The effective tax rate for the nine months ended September 30, 2020 and 2019 was 35.4% and 17.9% respectively, which can differ from the statutory income tax rate due to permanent book-to-tax differences. On March 27, 2020, President Trump signed into U.S. federal law the CARES Act, which is aimed at providing emergency assistance and health care for individuals, families, and businesses affected by the COVID-19 pandemic and generally supporting the U.S. economy. The CARES Act, among other things, includes provisions relating to refundable payroll tax credits, deferment of employer side social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property. In particular, under the CARES Act, NOLs arising in 2018, 2019, and 2020 taxable years may be carried back to each of the preceding five years to generate a refund. The tax impact of the carryback of 2019 losses was recorded in the first quarter income tax provision. We are analyzing the different aspects of the CARES Act to determine whether any other provisions may impact us. ( m ) Revenue Recognition Our revenue recognition policy is significant because the amount and timing of revenue is a key component of our results of operations. Certain criteria are required to be met in order to recognize revenue. If these criteria are not met, then the associated revenue is deferred until it is met. When consideration is received in advance of the delivery of goods or services, a contract liability is recorded. Our revenue contracts are identified when purchase orders are received and accepted from customers and represent a single performance obligation to sell our products to a customer. Net sales reflect the transaction prices for contracts, which include products shipped at selling list prices reduced by variable consideration. Variable consideration includes estimates for expected customer allowances, promotional programs for consumers, and sales returns. Based on our customer-by-customer history, our variable consideration estimates are generally accurate and subsequent adjustments are generally immaterial. Variable consideration is primarily comprised of customer allowances. Customer allowances primarily include reserves for trade promotions to support price features, displays, slotting fees, and other merchandising of our products to our customers. Promotional programs for consumers primarily include coupons, rebates, and certain other promotional programs, and do not represent a significant portion of variable consideration. The costs of both customer allowances and promotional programs for consumers are estimated using either the expected value or most likely amount approach, depending on the nature of the allowance, using all reasonably available information, including our historical experience and current expectations. Customer allowances and promotional programs for consumers are reflected in the transaction price when sales are recorded. We may adjust our estimates based on actual results and consideration of other factors that cause allowances. In the event that actual results differ from our estimates, the results of future periods may be impacted. Sales returns are generally not material to our financial statements, and do not comprise a significant portion of variable consideration. Estimates for sales returns are based on, among other things, an assessment of historical trends, information from customers, and anticipated returns related to current sales activity. These estimates are established in the period of sale and reduce our revenue in that period. Sales are recorded at the time that control of the products is transferred to customers. In evaluating the timing of the transfer of control of products to customers, we consider several indicators, including significant risks and rewards of products, our right to payment, and the legal title of the products. Based on the assessment of control indicators, sales are generally recognized when products are delivered to customers. We have also established an allowance for doubtful accounts. We estimate this allowance based upon, among other things, an assessment of the credit risk of specific customers and historical trends. We believe our allowance for doubtful accounts is adequate to absorb any losses which may arise. In the event that actual losses differ from our estimates, the results of future periods may be impacted. Customer allowances for trade promotions and allowance for doubtful accounts are included in net accounts receivable on the condensed consolidated balance sheets and were as follows at: September 30, 2020 December 31, 2019 Trade promotions $ 1,482 $ 943 Allowance for doubtful accounts 55 51 $ 1,537 $ 994 ( n ) Advertising Costs We expense advertising costs as incurred. ( o ) Stock-Based Compensation We account for share based payments by recognizing compensation expense based upon the estimated fair value of the awards on the date of grant. We determine the estimated grant-date fair value of stock options with only service conditions using the Black-Scholes option pricing model. In order to calculate the fair value of the options, certain assumptions are made regarding the components of the model, including the estimated fair value of underlying common stock, risk-free interest rate, volatility, expected dividend yield and expected option life. Changes to the assumptions could cause significant adjustments to the valuation. We recognize compensation costs ratably over the vesting period using the straight-line method, which approximates the service period. The Company issued restricted stock unit ("RSUs") awards with restrictions that lapse upon the passage of time (service vesting) and satisfaction of market conditions targeted to our Company’s stock price. For those restricted stock unit awards with only service vesting, the Company recognizes compensation cost on a straight-line basis over the service period. For awards with both market and service conditions, the Company starts recognizing compensation cost over the requisite service period, with the effect of the market conditions reflected in the calculation of the award's fair value at grant date. The Company values awards with only service vesting requirements based on the grant date share price. The Company values awards with market and service conditions using a Monte Carlo simulation. The Company determines the requisite service period for awards with both market and service conditions based on the longer of the explicit service period and the derived service period. Stock awards that contain market vesting conditions are included in the computations of diluted EPS reflecting the average number of shares that would be issued based on the highest 30-day average market price during the reporting periods, if their effect is dilutive. If the condition is based on an average of market prices over some period of time, the corresponding average for the period is used. ( p ) Operating Costs and Expenses Classification Cost of sales includes costs associated with manufacturing and distribution including labor, materials, freight-in, purchasing and receiving, quality control, repairs, maintenance, and other indirect costs, as well as warehousing and distribution costs. We classify freight-out as selling expenses. Other selling expenses consist primarily of costs for sales and sales support personnel, brokerage commissions, and promotional costs. Freight-out costs included in selling expenses totaled $680 and $568 for the three months ended September 30, 2020 and 2019, respectively, and totaled $1,987 and $1,789 for the nine months ended September 30, 2020 and 2019, respectively. General and administrative expenses consist primarily of wages and benefits associated with management and administrative support departments, business insurance costs, professional fees, office facility related expenses, and other general support costs. ( q ) Recently Issued Accounting Standards In December 2019, the FASB issued ASU No. 2019-12, “ Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes In March 2020, the FASB issued ASU No. 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting” (“ASU 2020-04”). The purpose of ASU 2020-04 is to provide optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. This guidance primarily provides temporary optional expedients which simplify the accounting for contract modifications to existing debt agreements expected to arise from the market transition from LIBOR to alternative reference rates. The amendments in ASU 2020-04 are effective for all entities as of March 12, 2020 through December 31, 2022. An entity may elect to apply amendments prospectively through December 31, 2022. The optional expedients were available to be used upon issuance of this guidance but we have not yet applied the guidance because we have not yet modified any of our existing contracts for reference rate reform. The Company is currently assessing the impact of ASU 2020-04 on our Condensed Consolidated Financial Statements. ( r ) Recently Adopted Accounting Standards In June 2016, the FASB issued ASU No. 2016-13, “ Financial Instruments —Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” . In August 2018, the FASB issued ASU No. 2018-13, “ Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement” |
Stock-Based Compensation
Stock-Based Compensation | 9 Months Ended |
Sep. 30, 2020 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Stock-Based Compensation | Note 2. Stock-Based Compensation During the nine months ended September 30, 2020, we did not grant any options to acquire shares of our common stock or any restricted stock units. No restricted stock units vested during the nine months ended September 30, 2020. Compensation cost related to stock options totaled $60 and $119 in the nine months ended September 30, 2020 and 2019, respectively. Approximately $113 of total unrecognized compensation costs related to non-vested stock options is expected to be recognized over the next two years, depending on the vesting provisions of the options. There was no tax benefit from recording the non-cash expense as it relates to the options granted to employees, as these were qualified stock options which are not normally tax deductible. Compensation cost related to RSUs totaled $46 for the nine months ended September 30, 2020 |
Earnings Per Share
Earnings Per Share | 9 Months Ended |
Sep. 30, 2020 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Note 3. Earnings per Share Per share data is determined by using the weighted average number of common shares outstanding. Common equivalent shares are considered only for diluted earnings per share, unless considered anti-dilutive. Common equivalent shares, determined using the treasury stock method, result from stock options with exercise prices that are below the average market price of the common stock. Basic earnings per share include no dilution and are computed by dividing income available to common shareholders by the weighted-average number of shares outstanding during the period. Diluted earnings per share reflect the potential of securities that could share in our earnings. A reconciliation of the weighted average number of common shares outstanding (in thousands) is as follows. The dilutive effect of stock options and RSUs are excluded for periods in which the Company has a net loss because the impact is anti-dilutive. Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Common shares outstanding, beginning of the period 12,462 12,460 12,462 12,408 Weighted average common shares issued 18 2 6 27 Weighted average number of common shares outstanding 12,480 12,462 12,468 12,435 Dilutive effect of common share equivalents - - - - Diluted weighted average number of common shares outstanding 12,480 12,462 12,468 12,435 Common stock equivalents (in thousands) that have been excluded from the calculation of earnings per share because they would have been anti-dilutive: Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Stock options 258 687 258 267 |
Segment Information
Segment Information | 9 Months Ended |
Sep. 30, 2020 | |
Segment Reporting [Abstract] | |
Segment Information | Note 4. Segment Information We operate in two different segments: household products and personal care products. We have chosen to organize our business around these segments based on differences in the products sold. Accounting policies for our segments are the same as those described in Note 1. We evaluate segment performance based on segment income or loss from operations. The following provides information on our segments for the three and nine months ended September 30: Three Months Ended September 30, 2020 Household Products Personal Care Products Total Net sales $ 4,178 $ 3,019 $ 7,197 Income (loss) from operations (90 ) (400 ) (490 ) Depreciation and amortization 297 157 454 Three Months Ended September 30, 2019 Household Products Personal Care Products Total Net sales $ 1,137 $ 6,041 $ 7,178 Income (loss) from operations 10 236 246 Capital and intangible asset expenditures 286 - 286 Depreciation and amortization 21 162 183 Nine Months Ended September 30, 2020 Household Products Personal Care Products Total Net sales $ 8,582 $ 12,552 $ 21,134 Income (loss) from operations 163 (793 ) (630 ) Capital and intangible asset expenditures 17 - 17 Depreciation and amortization 506 470 976 Nine Months Ended September 30, 2019 Household Products Personal Care Products Total Net sales $ 3,574 $ 16,791 $ 20,365 Loss from operations (145 ) (843 ) (988 ) Capital and intangible asset expenditures 387 - 387 Depreciation and amortization 63 489 552 |
Acquisition
Acquisition | 9 Months Ended |
Sep. 30, 2020 | |
Business Combinations [Abstract] | |
Acquisition | Note 5. Acquisitions On October 1, 2019, we entered into an Asset Purchase Agreement (the “Paramount Purchase Agreement”) with Paramount Chemical Specialties, Inc. (“Paramount”). Pursuant to the Purchase Agreement, we purchased all of Paramount’s intangible assets, finished goods inventory, and assets used in connection with the manufacture, sale and distribution of the Kids N Pets ® ® On June 25, 2020, we entered into an Asset Purchase Agreement (the “CR Brands Purchase Agreement”) with CR Brands, Inc., a Delaware corporation (“CR Brands”), and Sweep Acquisition Company, a Delaware corporation (“Sweep” and together with CR Brands, “Sellers”), pursuant to which we agreed to purchase from Sellers substantially all of the assets, properties, rights and interests of Sellers primarily used in the business of designing, formulating, marketing and selling laundry care products to retail and wholesale customers under the Biz® and Dryel® brand names. The transactions contemplated by the CR Brands Purchase Agreement were consummated on July 1, 2020 (the “CR Brands Acquisition”). The Company concluded that the CR Brands Acquisition qualified as a business combination under ASC 805. The total cash consideration paid for the CR Brands Acquisition was $10,529. The CR Brands Acquisition included contingent consideration we valued at $35. Both acquisitions and related financial information are part of our household segment. (a) Purchase Price Allocation The following summarizes the aggregate fair values of the assets acquired as part of the Paramount Acquisition: Inventories $ 306 Intangible assets 3,595 Goodwill 1,709 Total assets acquired $ 5,610 The following summarizes the aggregate fair values of the assets acquired as part of the CR Brands Acquisition: Inventories $ 1,279 Intangible assets 7,235 Goodwill 2,050 Total assets acquired $ 10,564 Intangible assets for the Paramount Acquisition consist of the following: Intangible Assets Useful Life Customer relationships $ 2,330 10 to 13 years Trade names 880 10 to 25 years Formulas and batching processes 370 10 years Non-compete 15 5 years $ 3,595 Intangible assets for the CR Brands Acquisition consist of the following: Intangible Assets Useful Life Customer relationships $ 4,500 9 years Trade names 1,780 20 years Formulas and batching processes 930 8 years Non-compete 25 5 years $ 7,235 In addition to the assets described above, the Company recorded a $27 and a $35 liability associated with contingent consideration for the Paramount Acquisition and CR Brands Acquisition, respectively, which are presented in other liabilities on the consolidated balance sheets. The estimates of the fair value of the assets acquired assumed at the date of the Paramount Acquisition and the CR Brands Acquisition are subject to adjustment during the measurement period (up to one year from each acquisition date). The primary areas of the accounting for the Paramount Acquisition and CR Brands Acquisition that are not yet finalized relate to the fair value of intangible assets acquired, residual goodwill and any related tax impact. The fair value of these net assets acquired is based on management’s estimates and assumptions, as well as other information compiled by management, including valuations that utilize customary valuation procedures and techniques. While the Company believes that such preliminary estimates provide a reasonable basis for estimating the fair value of assets acquired, it evaluates any necessary information prior to finalization of the fair value. During the measurement period, the Company will adjust assets if new information is obtained about facts and circumstances that existed as of the date of the Paramount Acquisition and CR Brands Acquisition that, if known, would have resulted in the revised estimated values of those assets as of that date. The impact of all changes that do not qualify as measurement period adjustments are included in current period earnings. If the actual results differ from the estimates and judgments used in these fair values, the amounts recorded in the condensed consolidated financial statements could be subject to a possible impairment of the intangible assets or goodwill, or require acceleration of the amortization expense of intangible assets in subsequent periods. (b) Pro Forma Results of Operations (Unaudited ) The following table summarizes selected unaudited pro forma condensed consolidated statements of operations data for the three and nine months ended September 30, 2019, as if the Paramount Acquisition had been completed on January 1, 2019. Three Months Ended September 30, 2019 Nine Months Ended September 30, 2019 Net sales $ 7,973 $ 22,749 Net income (loss) 486 (362 ) The following tables summarize selected unaudited pro forma condensed consolidated statements of operations data for the three and nine months ended September 30, 2020 and September 30, 2019, as if the CR Brands Acquisition had been completed on January 1, 2019. Three Months Ended September 30, 2020 Nine Months Ended September 30, 2020 Net sales $ 8,976 $ 26,471 Net (loss) income (176 ) 272 Three Months Ended September 30, 2019 Nine Months Ended September 30, 2019 Net sales $ 9,941 $ 28,655 Net income 738 393 This selected unaudited pro forma condensed consolidated financial data is included only for the purpose of illustration and does not necessarily indicate what the operating results would have been if the Paramount Acquisition and the CR Brands Acquisition had been completed on that date. Moreover, this information does not indicate what our future operating results will be. The information for 2019 prior to the Paramount Acquisition and for 2019 and 2020 prior to the CR Brands Acquisition is based on prior accounting records maintained by Paramount and CR Brands. In some cases, Paramount’s and CR Brands’ accounting policies may differ materially from accounting policies adopted by the Company following the Paramount Acquisition and the CR Brands Acquisition. The pro forma amounts above reflect the application of accounting policies and adjustment of the results of the Paramount Acquisition and CR Brands Acquisition to reflect: (1) the additional amortization that would have been charged to the acquired intangible assets; (2) additional interest expense relating to the borrowings on our Chase line of credit and UMB term loan and revolving credit facility, respectively; and (3) the tax impacts. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 9 Months Ended |
Sep. 30, 2020 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | Note 6 . Goodwill and Intangible Assets Goodwill and intangible assets, which are related to our acquisition of our Prell ® ® ® Biz ® and Dryel ® As of September 30, 2020 As of December 31, 2019 Gross Carrying Amount Accumulated Amortization Net Carrying Value Gross Carrying Amount Accumulated Amortization Net Carrying Value Intangible assets: Customer relationships $ 10,852 $ 2,024 $ 8,828 $ 6,352 $ 1,455 $ 4,897 Trade names 5,022 737 4,285 3,242 563 2,679 Formulas and batching processes 1,969 303 1,666 1,039 204 835 Internal-use software (not placed in service) 286 - 286 286 - 286 Non-compete agreement 66 26 40 41 19 22 18,195 3,090 15,105 10,960 2,241 8,719 Goodwill 5,280 3,230 Total intangible assets $ 20,385 $ 11,949 Amortization expense for the three months ended September 30, 2020 and 2019 was $401 and $155, respectively. Amortization expense for the nine months ended September 30, 2020 and 2019 was $849 and $310, respectively. Estimated amortization expense for 2020 and subsequent years is as follows: 2020 (remaining) $ 401 2021 1,604 2022 1,601 2023 1,601 2024 1,600 Thereafter 8,012 Total $ 14,819 |
Long-Term Debt and Line-of-Cred
Long-Term Debt and Line-of-Credit | 9 Months Ended |
Sep. 30, 2020 | |
Debt Disclosure [Abstract] | |
Long-Term Debt and Line-of-Credit | Note 7 . Long-Term Debt and Line-of-Credit On July 1, 2020, we entered into a Loan and Security Agreement (the “Loan Agreement”) with UMB Bank, N.A. (“UMB”) and we terminated our Credit Agreement, dated June 30, 2016, with JPMorgan Chase Bank, N.A., (as amended, the “Prior Credit Agreement”). Under the Loan Agreement we obtained a $3,000 term loan, with equal monthly payments fully amortized over three years, and interest at the LIBOR Rate + 4.50% with a floor of 5.50%, and a revolving credit facility, with a maximum commitment of $7,000 with interest at the LIBOR Rate + 3.75%, with a floor of 4.75%. The revolving credit facility will terminate on July 1, 2023, unless terminated earlier pursuant to the terms of the Loan Agreement. The loans are secured by all of the assets of the Company and all of its subsidiaries. The Loan Agreement requires, among other affirmative, negative and financial covenants, that we maintain a Fixed Charge Coverage Ratio of no less than 1.20 to 1.0, determined on a monthly basis. The Loan Agreement also contains covenants typical of transactions of this type, including among others, limitations on the our ability to: create, incur or assume any indebtedness or lien on our assets; pay dividends or make other distributions; redeem, retire or acquire outstanding common stock, options, warrants or other rights; make fundamental changes to our corporate structure or business; make investments or sell assets; or engage in certain other activities as set forth in the Loan Agreement. The Company was in compliance with the Loan Agreement financial covenants as of September 30, 2020. As of September 30, 2020, our term loan and revolving credit facility had an outstanding balance of $2,730 and $2,833, respectively, with an all-in interest rate of 5.50% and 4.75%, respectively. Unamortized loan costs were $532 as of September 30, 2020. As of September 30, 2020, the total principal payments due on our outstanding debt were as follows: Revolving Credit Facility Term Loan Total 2020 (remaining) $ - $ 250 $ 250 2021 - 1,000 1,000 2022 - 1,000 1,000 2023 2,833 480 3,313 Total minimum principal payments $ 2,833 $ 2,730 $ 5,563 |
Leases
Leases | 9 Months Ended |
Sep. 30, 2020 | |
Leases [Abstract] | |
Leases | Note 8 . Leases We have entered into leases for our corporate headquarters and office equipment with remaining lease terms up to 11 years. Some of these leases include both lease and nonlease components, which are accounted for as a single lease component as we have elected the practical expedient to combine these components for all leases. As most of the leases do not provide an implicit rate, we calculated the right-of-use assets and lease liabilities using our secured incremental borrowing rate at the lease commencement date. We currently do not have any finance leases outstanding. On March 11, 2020, we executed an office lease for a new corporate headquarters. As of that date, we had the right to control the use of the asset, which qualified as an operating lease. There were no initial direct costs associated with our new office lease and our deposit is fully refundable. Information related to leases was as follows: Three Months Ended September 30, 2020 Nine Months Ended September 30, 2020 Operating lease information: Operating lease cost $ 105 $ 250 Operating cash flows from operating leases 7 21 Net assets obtained in exchange for new operating lease liabilities - 3,156 Weighted average remaining lease term in years 10.09 10.09 Weighted average discount rate 5.1 % 5.1 % Future minimum annual lease payments are as follows: 2020 (remaining) $ 40 2021 411 2022 399 2023 413 2024 420 Thereafter 2,586 Total minimum lease payments $ 4,269 Less imputed interest (991 ) Total operating lease liability $ 3,278 |
Income from Distribution Agreem
Income from Distribution Agreement Termination | 9 Months Ended |
Sep. 30, 2020 | |
Other Income And Expenses [Abstract] | |
Income from Distribution Agreement Termination | Note 9 . Income from Distribution Agreement Termination On May 8, 2020, we entered into a settlement agreement with Montagne Jeunesse (“MJ”), the manufacturer of 7 th |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 10 . Subsequent Events On November 9, 2020, we executed the Fifth Amendment to the Customer Agreement with Church & Dwight, which extends the term of our distribution agreement through December 31, 2021, requires 120 days advance notice of non-renewal of future one-year terms, and adjusts the process for selling inventory after expiration or termination of the agreement. We have been a distributor for Church & Dwight since 2009. |
Organization and Summary of S_2
Organization and Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | (b) Principles of Consolidation Our Condensed Consolidated Financial Statements include our accounts and those of our wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated. |
Basis of Presentation | (c) Basis of Presentation The unaudited Condensed Consolidated Statements of Operations, Condensed Consolidated Balance Sheets, and Condensed Consolidated Statements of Cash Flows included in this Report have been prepared by the Company. In our opinion, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position at September 30, 2020 and results of operations and cash flows for all periods have been made. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). These Condensed Consolidated Financial Statements should be read in conjunction with our financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2019. The results of operations for the period ended September 30, 2020 are not necessarily indicative of the operating results for the full year. |
Use of Estimates | (d) Use of Estimates The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts in our financial statements of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include, but are not limited to, the realization of deferred tax assets, reserves for slow moving and obsolete inventory, customer returns and allowances, intangible asset useful lives and amortization method, fair value of assets acquired in business combinations, operating lease right-of-use assets and operating lease liabilities, and stock-based compensation. Actual results could differ from our estimates. |
Cash Equivalents | (e) Cash Equivalents We consider all highly liquid investments with an original maturity of three months or less at the date of acquisition to be cash equivalents. |
Inventories Valuation and Reserves | (f) Inventories Valuation and Reserves Inventories consist of raw materials and finished goods and are stated at the lower of cost (first-in, first-out method) or net realizable value, which is defined as the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. We estimate an inventory reserve, which is generally not material to our financial statements, for slow moving and obsolete products and raw materials based upon, among other things, an assessment of historical and anticipated sales of our products. In the event that actual results differ from our estimates, the results of future periods may be impacted. Inventories were comprised of the following at: September 30, 2020 December 31, 2019 Finished goods $ 4,621 $ 5,730 Raw materials 1,203 2,218 Inventory reserve for obsolescence (77 ) (107 ) $ 5,747 $ 7,841 Our remaining raw materials balance is to be sold to contract manufacturing partners based on production demand. |
Property and Equipment | (g) Property and Equipment Property and equipment are recorded at historical cost. Depreciation is provided using the straight-line method over the estimated useful lives of the assets ranging from three to 20 years. Production equipment and production support equipment are estimated to have useful lives of 15 to 20 years and three to 10 years, respectively. Office furniture and office machines are estimated to have useful lives of 10 to 20 years and three to five years, respectively. Maintenance and repairs are expensed as incurred. Improvements that extend the useful lives of the asset or provide improved efficiency are capitalized. |
Leases | (h) Leases Lease assets and lease liabilities are recognized at the commencement of an arrangement where it is determined at inception that a lease exists. Lease assets represent the right to use an underlying asset for the lease term, and lease liabilities represent the obligation to make lease payments arising from the lease. These assets and liabilities are initially recognized based on the present value of lease payments over the lease term calculated using our incremental borrowing rate generally applicable to the location of the lease asset, unless the implicit rate is readily determinable. Lease terms include options to extend or terminate the lease when it is reasonably certain that those options will be exercised. Certain nonlease components, such as maintenance and other services provided by the lessor, are included in the valuation of the lease. Leases with an initial term of 12 months or less, which are not material to our financial statements, are not recorded on the balance sheet, and the expense for these short-term leases and for operating leases is recognized on a straight-line basis over the lease term. Lease agreements with lease and nonlease components are combined as a single lease component. The Company evaluates reimbursable leasehold improvements based on whether improvements are indicative of a lessor or lessee asset. The Company concluded that all of its reimbursable leasehold improvement payments have qualified as lessor assets and, as such, have accounted for leasehold improvement payments as prepaid rent included in prepaid expenses on the condensed consolidated balance sheets. |
Intangible Assets and Goodwill | ( i ) Intangible Assets and Goodwill Intangible assets consist of customer relationships, trade names, formulas, batching processes, internal-use software and a non-compete agreement. The fair value of the intangible assets is amortized over their estimated useful lives and range from a period of five to 25 years. Goodwill consists of the excess of the purchase price over the fair value of tangible and identifiable intangible assets acquired. Internal-use software costs recognized as an intangible asset relates to capitalizable costs of computer software obtained for internal-use as defined by the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 350-40-30-1. All other internal-use software costs are expensed as incurred by the Company. Amortization is recorded straight-line over the estimated useful life of the software once the software is ready for its intended use. As of September 30, 2020, our internal-use software was not ready for its intended use. The estimated useful life for internal-use software will be determined and periodically reassessed based on considerations for obsolescence, technology, competition, and other economic factors. Goodwill and intangible assets deemed to have indefinite lives are not amortized but are subject to annual impairment tests, and in certain circumstances these assets are written down to fair value if impaired. |
Financial Instruments | ( j ) Financial Instruments Financial instruments which potentially subject us to concentrations of credit risk include cash and cash equivalents and accounts receivable. We maintain our cash balances in the form of bank demand deposits with financial institutions that we believe are creditworthy. Historically, we have maintained balances in various operating accounts in excess of federally insured limits. We establish an allowance for doubtful accounts, which is generally not material to our financial statements, based upon factors surrounding the credit risk of specific customers, historical trends and other information. We have no significant financial instruments with off-balance sheet risk of accounting loss, such as foreign exchange contracts, option contracts or other foreign currency hedging arrangements. The recorded amounts for cash and cash equivalents, receivables, other current assets, accounts payable, and accrued expenses approximate fair value due to the short-term nature of these financial instruments. |
Purchase Accounting for Acquisitions | (k) Purchase Accounting for Acquisitions We apply the acquisition method of accounting for a business combination. In general, this methodology requires us to record assets acquired and liabilities assumed at their respective fair values at the date of acquisition. Any amount of the purchase price paid that is in excess of the estimated fair value of the net assets acquired is recorded as goodwill. For certain acquisitions, we also record a liability for contingent consideration based on estimated future business performance. We monitor our assumptions surrounding these estimated future cash flows and, if there is a significant change, would record an adjustment to the contingent consideration liability and a corresponding adjustment to either income or expense. We determine fair value using widely accepted valuation techniques, primarily discounted cash flow and market multiple analyses. These types of analyses require us to make assumptions and estimates regarding industry and economic factors, the profitability of future business strategies, discount rates and cash flow. If actual results are not consistent with our assumptions and estimates, or our assumptions and estimates change due to new information, we may be exposed to an impairment charge in the future. If the contingent consideration paid for any of our acquisitions differs from the amount initially recorded, we would record either income or expense associated with the change in liability. |
Income Taxes | ( l ) Income Taxes Income taxes reflect the tax effects of transactions reported in the Condensed Consolidated Financial Statements and consist of taxes currently payable plus deferred income taxes related to certain income and expenses recognized in different periods for financial and income tax reporting purposes. Deferred income tax assets and liabilities are recognized for the future income tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective income tax bases. A valuation allowance is established when it is more-likely-than-not that some portion or all of a deferred tax asset will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the period in which related temporary differences become deductible. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Taxes are reported based on tax positions that meet a more-likely-than-not standard and that are measured at the amount that is more-likely-than-not to be realized. Differences between financial and tax reporting which do not meet this threshold are required to be recorded as unrecognized tax benefits or expense. We classify penalty and interest expense related to income tax liabilities as an income tax expense. There are no significant interest and penalties recognized in the Condensed Consolidated Statements of Income or accrued on the Condensed Consolidated Balance Sheets. The effective tax rate for the nine months ended September 30, 2020 and 2019 was 35.4% and 17.9% respectively, which can differ from the statutory income tax rate due to permanent book-to-tax differences. On March 27, 2020, President Trump signed into U.S. federal law the CARES Act, which is aimed at providing emergency assistance and health care for individuals, families, and businesses affected by the COVID-19 pandemic and generally supporting the U.S. economy. The CARES Act, among other things, includes provisions relating to refundable payroll tax credits, deferment of employer side social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property. In particular, under the CARES Act, NOLs arising in 2018, 2019, and 2020 taxable years may be carried back to each of the preceding five years to generate a refund. The tax impact of the carryback of 2019 losses was recorded in the first quarter income tax provision. We are analyzing the different aspects of the CARES Act to determine whether any other provisions may impact us. |
Revenue Recognition | ( m ) Revenue Recognition Our revenue recognition policy is significant because the amount and timing of revenue is a key component of our results of operations. Certain criteria are required to be met in order to recognize revenue. If these criteria are not met, then the associated revenue is deferred until it is met. When consideration is received in advance of the delivery of goods or services, a contract liability is recorded. Our revenue contracts are identified when purchase orders are received and accepted from customers and represent a single performance obligation to sell our products to a customer. Net sales reflect the transaction prices for contracts, which include products shipped at selling list prices reduced by variable consideration. Variable consideration includes estimates for expected customer allowances, promotional programs for consumers, and sales returns. Based on our customer-by-customer history, our variable consideration estimates are generally accurate and subsequent adjustments are generally immaterial. Variable consideration is primarily comprised of customer allowances. Customer allowances primarily include reserves for trade promotions to support price features, displays, slotting fees, and other merchandising of our products to our customers. Promotional programs for consumers primarily include coupons, rebates, and certain other promotional programs, and do not represent a significant portion of variable consideration. The costs of both customer allowances and promotional programs for consumers are estimated using either the expected value or most likely amount approach, depending on the nature of the allowance, using all reasonably available information, including our historical experience and current expectations. Customer allowances and promotional programs for consumers are reflected in the transaction price when sales are recorded. We may adjust our estimates based on actual results and consideration of other factors that cause allowances. In the event that actual results differ from our estimates, the results of future periods may be impacted. Sales returns are generally not material to our financial statements, and do not comprise a significant portion of variable consideration. Estimates for sales returns are based on, among other things, an assessment of historical trends, information from customers, and anticipated returns related to current sales activity. These estimates are established in the period of sale and reduce our revenue in that period. Sales are recorded at the time that control of the products is transferred to customers. In evaluating the timing of the transfer of control of products to customers, we consider several indicators, including significant risks and rewards of products, our right to payment, and the legal title of the products. Based on the assessment of control indicators, sales are generally recognized when products are delivered to customers. We have also established an allowance for doubtful accounts. We estimate this allowance based upon, among other things, an assessment of the credit risk of specific customers and historical trends. We believe our allowance for doubtful accounts is adequate to absorb any losses which may arise. In the event that actual losses differ from our estimates, the results of future periods may be impacted. Customer allowances for trade promotions and allowance for doubtful accounts are included in net accounts receivable on the condensed consolidated balance sheets and were as follows at: September 30, 2020 December 31, 2019 Trade promotions $ 1,482 $ 943 Allowance for doubtful accounts 55 51 $ 1,537 $ 994 |
Advertising Costs | ( n ) Advertising Costs We expense advertising costs as incurred. |
Stock-based Compensation | ( o ) Stock-Based Compensation We account for share based payments by recognizing compensation expense based upon the estimated fair value of the awards on the date of grant. We determine the estimated grant-date fair value of stock options with only service conditions using the Black-Scholes option pricing model. In order to calculate the fair value of the options, certain assumptions are made regarding the components of the model, including the estimated fair value of underlying common stock, risk-free interest rate, volatility, expected dividend yield and expected option life. Changes to the assumptions could cause significant adjustments to the valuation. We recognize compensation costs ratably over the vesting period using the straight-line method, which approximates the service period. The Company issued restricted stock unit ("RSUs") awards with restrictions that lapse upon the passage of time (service vesting) and satisfaction of market conditions targeted to our Company’s stock price. For those restricted stock unit awards with only service vesting, the Company recognizes compensation cost on a straight-line basis over the service period. For awards with both market and service conditions, the Company starts recognizing compensation cost over the requisite service period, with the effect of the market conditions reflected in the calculation of the award's fair value at grant date. The Company values awards with only service vesting requirements based on the grant date share price. The Company values awards with market and service conditions using a Monte Carlo simulation. The Company determines the requisite service period for awards with both market and service conditions based on the longer of the explicit service period and the derived service period. Stock awards that contain market vesting conditions are included in the computations of diluted EPS reflecting the average number of shares that would be issued based on the highest 30-day average market price during the reporting periods, if their effect is dilutive. If the condition is based on an average of market prices over some period of time, the corresponding average for the period is used. |
Operating Costs and Expenses Classification | ( p ) Operating Costs and Expenses Classification Cost of sales includes costs associated with manufacturing and distribution including labor, materials, freight-in, purchasing and receiving, quality control, repairs, maintenance, and other indirect costs, as well as warehousing and distribution costs. We classify freight-out as selling expenses. Other selling expenses consist primarily of costs for sales and sales support personnel, brokerage commissions, and promotional costs. Freight-out costs included in selling expenses totaled $680 and $568 for the three months ended September 30, 2020 and 2019, respectively, and totaled $1,987 and $1,789 for the nine months ended September 30, 2020 and 2019, respectively. General and administrative expenses consist primarily of wages and benefits associated with management and administrative support departments, business insurance costs, professional fees, office facility related expenses, and other general support costs. |
Recently Issued Accounting Standards | ( q ) Recently Issued Accounting Standards In December 2019, the FASB issued ASU No. 2019-12, “ Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes In March 2020, the FASB issued ASU No. 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting” (“ASU 2020-04”). The purpose of ASU 2020-04 is to provide optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. This guidance primarily provides temporary optional expedients which simplify the accounting for contract modifications to existing debt agreements expected to arise from the market transition from LIBOR to alternative reference rates. The amendments in ASU 2020-04 are effective for all entities as of March 12, 2020 through December 31, 2022. An entity may elect to apply amendments prospectively through December 31, 2022. The optional expedients were available to be used upon issuance of this guidance but we have not yet applied the guidance because we have not yet modified any of our existing contracts for reference rate reform. The Company is currently assessing the impact of ASU 2020-04 on our Condensed Consolidated Financial Statements. |
Recently Adopted Accounting Standards | ( r ) Recently Adopted Accounting Standards In June 2016, the FASB issued ASU No. 2016-13, “ Financial Instruments —Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” . In August 2018, the FASB issued ASU No. 2018-13, “ Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement” |
Organization and Summary of S_3
Organization and Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Composition of Inventory | Inventories were comprised of the following at: September 30, 2020 December 31, 2019 Finished goods $ 4,621 $ 5,730 Raw materials 1,203 2,218 Inventory reserve for obsolescence (77 ) (107 ) $ 5,747 $ 7,841 |
Summary of Customer Allowances for Trade Promotions and Allowance for Doubtful Accounts | Customer allowances for trade promotions and allowance for doubtful accounts are included in net accounts receivable on the condensed consolidated balance sheets and were as follows at: September 30, 2020 December 31, 2019 Trade promotions $ 1,482 $ 943 Allowance for doubtful accounts 55 51 $ 1,537 $ 994 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Earnings Per Share [Abstract] | |
Reconciliation of the Weighted Average Number of Common Shares Outstanding | A reconciliation of the weighted average number of common shares outstanding (in thousands) is as follows. The dilutive effect of stock options and RSUs are excluded for periods in which the Company has a net loss because the impact is anti-dilutive. Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Common shares outstanding, beginning of the period 12,462 12,460 12,462 12,408 Weighted average common shares issued 18 2 6 27 Weighted average number of common shares outstanding 12,480 12,462 12,468 12,435 Dilutive effect of common share equivalents - - - - Diluted weighted average number of common shares outstanding 12,480 12,462 12,468 12,435 |
Common Stock Equivalents Excluded From the Calculation of Earnings Per Share | Common stock equivalents (in thousands) that have been excluded from the calculation of earnings per share because they would have been anti-dilutive: Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Stock options 258 687 258 267 |
Segment Information (Tables)
Segment Information (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Segment Reporting [Abstract] | |
Information on Segments | The following provides information on our segments for the three and nine months ended September 30: Three Months Ended September 30, 2020 Household Products Personal Care Products Total Net sales $ 4,178 $ 3,019 $ 7,197 Income (loss) from operations (90 ) (400 ) (490 ) Depreciation and amortization 297 157 454 Three Months Ended September 30, 2019 Household Products Personal Care Products Total Net sales $ 1,137 $ 6,041 $ 7,178 Income (loss) from operations 10 236 246 Capital and intangible asset expenditures 286 - 286 Depreciation and amortization 21 162 183 Nine Months Ended September 30, 2020 Household Products Personal Care Products Total Net sales $ 8,582 $ 12,552 $ 21,134 Income (loss) from operations 163 (793 ) (630 ) Capital and intangible asset expenditures 17 - 17 Depreciation and amortization 506 470 976 Nine Months Ended September 30, 2019 Household Products Personal Care Products Total Net sales $ 3,574 $ 16,791 $ 20,365 Loss from operations (145 ) (843 ) (988 ) Capital and intangible asset expenditures 387 - 387 Depreciation and amortization 63 489 552 |
Acquisition (Tables)
Acquisition (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Paramount | |
Summary of Aggregate Fair Values of Assets Acquired | The following summarizes the aggregate fair values of the assets acquired as part of the Paramount Acquisition: Inventories $ 306 Intangible assets 3,595 Goodwill 1,709 Total assets acquired $ 5,610 |
Summary of Intangible Assets | Intangible assets for the Paramount Acquisition consist of the following: Intangible Assets Useful Life Customer relationships $ 2,330 10 to 13 years Trade names 880 10 to 25 years Formulas and batching processes 370 10 years Non-compete 15 5 years $ 3,595 |
Summary of Selected Unaudited Pro Forma Condensed Consolidated Statements of Operations | The following table summarizes selected unaudited pro forma condensed consolidated statements of operations data for the three and nine months ended September 30, 2019, as if the Paramount Acquisition had been completed on January 1, 2019. Three Months Ended September 30, 2019 Nine Months Ended September 30, 2019 Net sales $ 7,973 $ 22,749 Net income (loss) 486 (362 ) |
CR Brands Acquisition | |
Summary of Aggregate Fair Values of Assets Acquired | The following summarizes the aggregate fair values of the assets acquired as part of the CR Brands Acquisition: Inventories $ 1,279 Intangible assets 7,235 Goodwill 2,050 Total assets acquired $ 10,564 |
Summary of Intangible Assets | Intangible assets for the CR Brands Acquisition consist of the following: Intangible Assets Useful Life Customer relationships $ 4,500 9 years Trade names 1,780 20 years Formulas and batching processes 930 8 years Non-compete 25 5 years $ 7,235 |
Summary of Selected Unaudited Pro Forma Condensed Consolidated Statements of Operations | The following tables summarize selected unaudited pro forma condensed consolidated statements of operations data for the three and nine months ended September 30, 2020 and September 30, 2019, as if the CR Brands Acquisition had been completed on January 1, 2019. Three Months Ended September 30, 2020 Nine Months Ended September 30, 2020 Net sales $ 8,976 $ 26,471 Net (loss) income (176 ) 272 Three Months Ended September 30, 2019 Nine Months Ended September 30, 2019 Net sales $ 9,941 $ 28,655 Net income 738 393 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill and Intangible Assets | Goodwill and intangible assets, which are related to our acquisition of our Prell ® ® ® Biz ® and Dryel ® As of September 30, 2020 As of December 31, 2019 Gross Carrying Amount Accumulated Amortization Net Carrying Value Gross Carrying Amount Accumulated Amortization Net Carrying Value Intangible assets: Customer relationships $ 10,852 $ 2,024 $ 8,828 $ 6,352 $ 1,455 $ 4,897 Trade names 5,022 737 4,285 3,242 563 2,679 Formulas and batching processes 1,969 303 1,666 1,039 204 835 Internal-use software (not placed in service) 286 - 286 286 - 286 Non-compete agreement 66 26 40 41 19 22 18,195 3,090 15,105 10,960 2,241 8,719 Goodwill 5,280 3,230 Total intangible assets $ 20,385 $ 11,949 |
Schedule of Estimated Amortization Expense | Estimated amortization expense for 2020 and subsequent years is as follows: 2020 (remaining) $ 401 2021 1,604 2022 1,601 2023 1,601 2024 1,600 Thereafter 8,012 Total $ 14,819 |
Long-Term Debt and Line-of-Cr_2
Long-Term Debt and Line-of-Credit (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Debt Disclosure [Abstract] | |
Summary of Principal Payments Due on Outstanding Debt | As of September 30, 2020, the total principal payments due on our outstanding debt were as follows: Revolving Credit Facility Term Loan Total 2020 (remaining) $ - $ 250 $ 250 2021 - 1,000 1,000 2022 - 1,000 1,000 2023 2,833 480 3,313 Total minimum principal payments $ 2,833 $ 2,730 $ 5,563 |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Leases [Abstract] | |
Schedule of Information Related to Leases | Information related to leases was as follows: Three Months Ended September 30, 2020 Nine Months Ended September 30, 2020 Operating lease information: Operating lease cost $ 105 $ 250 Operating cash flows from operating leases 7 21 Net assets obtained in exchange for new operating lease liabilities - 3,156 Weighted average remaining lease term in years 10.09 10.09 Weighted average discount rate 5.1 % 5.1 % |
Schedule of Future Minimum Annual Lease Payments | Future minimum annual lease payments are as follows: 2020 (remaining) $ 40 2021 411 2022 399 2023 413 2024 420 Thereafter 2,586 Total minimum lease payments $ 4,269 Less imputed interest (991 ) Total operating lease liability $ 3,278 |
Organization and Summary of S_4
Organization and Summary of Significant Accounting Policies - Additional Information (Details) | 9 Months Ended |
Sep. 30, 2020Segment | |
Accounting Policies [Abstract] | |
Number of business segment | 2 |
Organization and Summary of S_5
Organization and Summary of Significant Accounting Policies - Composition of Inventory (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Inventory Disclosure [Abstract] | ||
Finished goods | $ 4,621 | $ 5,730 |
Raw materials | 1,203 | 2,218 |
Inventory reserve for obsolescence | (77) | (107) |
Inventories, net | $ 5,747 | $ 7,841 |
Organization and Summary of S_6
Organization and Summary of Significant Accounting Policies - Additional Information 1 (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Schedule Of Organization And Presentation Of Financial Statements [Line Items] | ||
Significant financial instruments with off-balance sheet risk | $ 0 | |
Interest and penalties recognized in condensed consolidated statements of income | 0 | |
Accrued interest or penalties related to uncertain tax positions | $ 0 | |
Effective income tax rate | 35.40% | 17.90% |
Minimum | ||
Schedule Of Organization And Presentation Of Financial Statements [Line Items] | ||
Useful life of property, plant and equipment | 3 years | |
Useful lives of intangible assets | 5 years | |
Maximum | ||
Schedule Of Organization And Presentation Of Financial Statements [Line Items] | ||
Useful life of property, plant and equipment | 20 years | |
Useful lives of intangible assets | 25 years | |
Production Equipment | Minimum | ||
Schedule Of Organization And Presentation Of Financial Statements [Line Items] | ||
Useful life of property, plant and equipment | 15 years | |
Production Equipment | Maximum | ||
Schedule Of Organization And Presentation Of Financial Statements [Line Items] | ||
Useful life of property, plant and equipment | 20 years | |
Production Support Equipment | Minimum | ||
Schedule Of Organization And Presentation Of Financial Statements [Line Items] | ||
Useful life of property, plant and equipment | 3 years | |
Production Support Equipment | Maximum | ||
Schedule Of Organization And Presentation Of Financial Statements [Line Items] | ||
Useful life of property, plant and equipment | 10 years | |
Office Furniture and Equipment | Minimum | ||
Schedule Of Organization And Presentation Of Financial Statements [Line Items] | ||
Useful life of property, plant and equipment | 10 years | |
Office Furniture and Equipment | Maximum | ||
Schedule Of Organization And Presentation Of Financial Statements [Line Items] | ||
Useful life of property, plant and equipment | 20 years | |
Office Equipment | Minimum | ||
Schedule Of Organization And Presentation Of Financial Statements [Line Items] | ||
Useful life of property, plant and equipment | 3 years | |
Office Equipment | Maximum | ||
Schedule Of Organization And Presentation Of Financial Statements [Line Items] | ||
Useful life of property, plant and equipment | 5 years |
Organization and Summary of S_7
Organization and Summary of Significant Accounting Policies - Summary of Customer Allowances for Trade Promotions and Allowance for Doubtful Accounts (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Accounting Policies [Abstract] | ||
Trade promotions | $ 1,482 | $ 943 |
Allowance for doubtful accounts | 55 | 51 |
Trade promotions and allowance for doubtful accounts | $ 1,537 | $ 994 |
Organization and Summary of S_8
Organization and Summary of Significant Accounting Policies - Additional Information 2 (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Selling Expenses | ||||
Schedule Of Organization And Presentation Of Financial Statements [Line Items] | ||||
Freight-out costs | $ 680 | $ 568 | $ 1,987 | $ 1,789 |
Stock-Based Compensation - Addi
Stock-Based Compensation - Additional Information (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Stock-based compensation | $ 106,000 | $ 119,000 |
Unrecognized compensation costs related to non-vested stock options | $ 113,000 | |
Period over which compensation costs related to non-vested stock options recognize | 2 years | |
Tax benefit from recording non-cash expense relates to options granted to employees | $ 0 | |
Restricted Stock Units (RSUs) | ||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Number of restricted stock units granted | 0 | |
Restricted stock units vested | 0 | |
Stock-based compensation | $ 46,000 | |
Unrecognized compensation costs related to non-vested stock options | 129,000 | |
Stock Options | ||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Stock-based compensation | $ 60,000 | $ 119,000 |
Common Stock | ||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Number of options granted | 0 |
Earnings Per Share - Reconcilia
Earnings Per Share - Reconciliation of the Weighted Average Number of Common Shares Outstanding (Details) - shares shares in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Earnings Per Share [Abstract] | ||||
Beginning Balance, Shares | 12,462 | 12,460 | 12,462 | 12,408 |
Weighted average common shares issued | 18 | 2 | 6 | 27 |
Weighted average number of common shares outstanding | 12,480 | 12,462 | 12,468 | 12,435 |
Diluted weighted average number of common shares outstanding | 12,480 | 12,462 | 12,468 | 12,435 |
Earnings Per Share - Common Sto
Earnings Per Share - Common Stock Equivalents Excluded From the Calculation of Earnings Per Share (Details) - shares shares in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Stock Options | ||||
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | ||||
Anti-dilutive securities excluded from calculation of earnings per share | 258 | 687 | 258 | 267 |
Segment Information - Additiona
Segment Information - Additional Information (Details) | 9 Months Ended |
Sep. 30, 2020Segment | |
Segment Reporting [Abstract] | |
Number of business segment | 2 |
Segment Information - Informati
Segment Information - Information on Segments (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Segment Reporting Information [Line Items] | ||||
Net sales | $ 7,197 | $ 7,178 | $ 21,134 | $ 20,365 |
Income (loss) from operations | (490) | 246 | (630) | (988) |
Capital and intangible asset expenditures | 286 | 17 | 387 | |
Depreciation and amortization | 454 | 183 | 976 | 552 |
Household Products | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 4,178 | 1,137 | 8,582 | 3,574 |
Income (loss) from operations | (90) | 10 | 163 | (145) |
Capital and intangible asset expenditures | 286 | 17 | 387 | |
Depreciation and amortization | 297 | 21 | 506 | 63 |
Personal Care Products | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 3,019 | 6,041 | 12,552 | 16,791 |
Income (loss) from operations | (400) | 236 | (793) | (843) |
Depreciation and amortization | $ 157 | $ 162 | $ 470 | $ 489 |
Acquisition - Additional Inform
Acquisition - Additional Information (Details) - USD ($) $ in Thousands | Jul. 01, 2020 | Oct. 01, 2019 |
Paramount | ||
Business Acquisition [Line Items] | ||
Total cash consideration paid | $ 5,583 | |
Business combination contingent consideration | 27 | |
Paramount | Other Liabilities | ||
Business Acquisition [Line Items] | ||
Business combination contingent consideration | $ 27 | |
CR Brands Acquisition | ||
Business Acquisition [Line Items] | ||
Total cash consideration paid | $ 10,529 | |
Business combination contingent consideration | 35 | |
CR Brands Acquisition | Other Liabilities | ||
Business Acquisition [Line Items] | ||
Business combination contingent consideration | $ 35 |
Acquisition - Summary of Aggreg
Acquisition - Summary of Aggregate Fair Values of Assets Acquired (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Jul. 01, 2020 | Dec. 31, 2019 | Oct. 01, 2019 |
Business Acquisition [Line Items] | ||||
Goodwill | $ 5,280 | $ 3,230 | ||
Paramount | ||||
Business Acquisition [Line Items] | ||||
Inventories | $ 306 | |||
Intangible assets | 3,595 | |||
Goodwill | 1,709 | |||
Total assets acquired | $ 5,610 | |||
CR Brands Acquisition | ||||
Business Acquisition [Line Items] | ||||
Inventories | $ 1,279 | |||
Intangible assets | 7,235 | |||
Goodwill | 2,050 | |||
Total assets acquired | $ 10,564 |
Acquisition - Summary of Intang
Acquisition - Summary of Intangible Assets (Details) - USD ($) $ in Thousands | Jul. 01, 2020 | Oct. 01, 2019 |
Paramount | ||
Business Acquisition [Line Items] | ||
Intangible Assets | $ 3,595 | |
Paramount | Customer Relationships | ||
Business Acquisition [Line Items] | ||
Intangible Assets | $ 2,330 | |
Paramount | Customer Relationships | Minimum | ||
Business Acquisition [Line Items] | ||
Useful Life | 10 years | |
Paramount | Customer Relationships | Maximum | ||
Business Acquisition [Line Items] | ||
Useful Life | 13 years | |
Paramount | Trade Names | ||
Business Acquisition [Line Items] | ||
Intangible Assets | $ 880 | |
Paramount | Trade Names | Minimum | ||
Business Acquisition [Line Items] | ||
Useful Life | 10 years | |
Paramount | Trade Names | Maximum | ||
Business Acquisition [Line Items] | ||
Useful Life | 25 years | |
Paramount | Formulas and Batching Processes | ||
Business Acquisition [Line Items] | ||
Intangible Assets | $ 370 | |
Useful Life | 10 years | |
Paramount | Non-compete | ||
Business Acquisition [Line Items] | ||
Intangible Assets | $ 15 | |
Useful Life | 5 years | |
CR Brands Acquisition | ||
Business Acquisition [Line Items] | ||
Intangible Assets | $ 7,235 | |
CR Brands Acquisition | Customer Relationships | ||
Business Acquisition [Line Items] | ||
Intangible Assets | $ 4,500 | |
Useful Life | 9 years | |
CR Brands Acquisition | Trade Names | ||
Business Acquisition [Line Items] | ||
Intangible Assets | $ 1,780 | |
Useful Life | 20 years | |
CR Brands Acquisition | Formulas and Batching Processes | ||
Business Acquisition [Line Items] | ||
Intangible Assets | $ 930 | |
Useful Life | 8 years | |
CR Brands Acquisition | Non-compete | ||
Business Acquisition [Line Items] | ||
Intangible Assets | $ 25 | |
Useful Life | 5 years |
Acquisition - Summary of Select
Acquisition - Summary of Selected Unaudited Pro Forma Condensed Consolidated Statements of Operations (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Paramount | ||||
Business Acquisition [Line Items] | ||||
Net sales | $ 7,973 | $ 22,749 | ||
Net income (loss) | 486 | (362) | ||
CR Brands Acquisition | ||||
Business Acquisition [Line Items] | ||||
Net sales | $ 8,976 | 9,941 | $ 26,471 | 28,655 |
Net income (loss) | $ (176) | $ 738 | $ 272 | $ 393 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets - Schedule of Goodwill and Intangible Assets (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Finite Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 18,195 | $ 10,960 |
Accumulated Amortization | 3,090 | 2,241 |
Net Carrying Value | 15,105 | 8,719 |
Goodwill | 5,280 | 3,230 |
Total intangible assets | 20,385 | 11,949 |
Customer Relationships | ||
Finite Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 10,852 | 6,352 |
Accumulated Amortization | 2,024 | 1,455 |
Net Carrying Value | 8,828 | 4,897 |
Trade Names | ||
Finite Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 5,022 | 3,242 |
Accumulated Amortization | 737 | 563 |
Net Carrying Value | 4,285 | 2,679 |
Formulas and Batching Processes | ||
Finite Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 1,969 | 1,039 |
Accumulated Amortization | 303 | 204 |
Net Carrying Value | 1,666 | 835 |
Internal-use Software (Not Placed in Service) | ||
Finite Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 286 | 286 |
Net Carrying Value | 286 | 286 |
Non-compete Agreement | ||
Finite Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 66 | 41 |
Accumulated Amortization | 26 | 19 |
Net Carrying Value | $ 40 | $ 22 |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Goodwill And Intangible Assets Disclosure [Abstract] | ||||
Amortization expense of intangible assets | $ 401 | $ 155 | $ 849 | $ 310 |
Goodwill and Intangible Asset_4
Goodwill and Intangible Assets - Schedule of Estimated Amortization Expense (Details) $ in Thousands | Sep. 30, 2020USD ($) |
Goodwill And Intangible Assets Disclosure [Abstract] | |
2020 (remaining) | $ 401 |
2021 | 1,604 |
2022 | 1,601 |
2023 | 1,601 |
2024 | 1,600 |
Thereafter | 8,012 |
Total | $ 14,819 |
Long-Term Debt and Line-of-Cr_3
Long-Term Debt and Line-of-Credit - Additional Information (Details) $ in Thousands | Jul. 01, 2020USD ($) | Sep. 30, 2020USD ($) |
Debt Instrument [Line Items] | ||
Debt outstanding | $ 5,563 | |
Unamortized loan costs | 532 | |
Revolving Credit Facility | ||
Debt Instrument [Line Items] | ||
Debt outstanding | $ 2,833 | |
Debt outstanding interest rate | 4.75% | |
Term Loan | ||
Debt Instrument [Line Items] | ||
Debt outstanding | $ 2,730 | |
Debt outstanding interest rate | 5.50% | |
Maximum | ||
Debt Instrument [Line Items] | ||
Fixed charge coverage ratio on monthly basis | 1.20 | |
UMB Bank, N.A | Loan Agreement | Revolving Credit Facility | ||
Debt Instrument [Line Items] | ||
Credit facility, terminate date | Jul. 1, 2023 | |
UMB Bank, N.A | Loan Agreement | Term Loan | ||
Debt Instrument [Line Items] | ||
Term loan amount | $ 3,000 | |
Term loan, frequency of commitment fee payment | monthly | |
Term loan, payment term | 3 years | |
UMB Bank, N.A | Loan Agreement | Maximum | Revolving Credit Facility | ||
Debt Instrument [Line Items] | ||
Credit facility amount | $ 7,000 | |
LIBOR Rate | UMB Bank, N.A | Loan Agreement | Revolving Credit Facility | ||
Debt Instrument [Line Items] | ||
Debt instrument, variable interest rate | 3.75% | |
LIBOR Rate | UMB Bank, N.A | Loan Agreement | Term Loan | ||
Debt Instrument [Line Items] | ||
Debt instrument, variable interest rate | 4.50% | |
Floor Rate | UMB Bank, N.A | Loan Agreement | Revolving Credit Facility | ||
Debt Instrument [Line Items] | ||
Debt instrument, variable interest rate | 4.75% | |
Floor Rate | UMB Bank, N.A | Loan Agreement | Term Loan | ||
Debt Instrument [Line Items] | ||
Debt instrument, variable interest rate | 5.50% |
Long-Term Debt and Line-of-Cr_4
Long-Term Debt and Line-of-Credit - Summary of Principal Payments Due on Outstanding Debt (Details) $ in Thousands | Sep. 30, 2020USD ($) |
Debt Instrument [Line Items] | |
2020 (remaining) | $ 250 |
2021 | 1,000 |
2022 | 1,000 |
2023 | 3,313 |
Total minimum principal payments | 5,563 |
Revolving Credit Facility | |
Debt Instrument [Line Items] | |
2023 | 2,833 |
Total minimum principal payments | 2,833 |
Term Loan | |
Debt Instrument [Line Items] | |
2020 (remaining) | 250 |
2021 | 1,000 |
2022 | 1,000 |
2023 | 480 |
Total minimum principal payments | $ 2,730 |
Leases - Additional Information
Leases - Additional Information (Details) | Sep. 30, 2020 |
Maximum | |
Lessee Lease Description [Line Items] | |
Remaining lease terms | 11 years |
Leases - Schedule of Informatio
Leases - Schedule of Information Related to Leases (Details) $ in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 30, 2020USD ($) | Sep. 30, 2020USD ($) | |
Operating lease information: | ||
Operating lease cost | $ 105 | $ 250 |
Operating cash flows from operating leases | $ 7 | 21 |
Net assets obtained in exchange for new operating lease liabilities | $ 3,156 | |
Weighted average remaining lease term in years | 10 years 1 month 2 days | 10 years 1 month 2 days |
Weighted average discount rate | 5.10% | 5.10% |
Leases - Schedule of Future Min
Leases - Schedule of Future Minimum Annual Lease Payments (Details) $ in Thousands | Sep. 30, 2020USD ($) |
Leases [Abstract] | |
2020 (remaining) | $ 40 |
2021 | 411 |
2022 | 399 |
2023 | 413 |
2024 | 420 |
Thereafter | 2,586 |
Total minimum lease payments | 4,269 |
Less imputed interest | (991) |
Total operating lease liability | $ 3,278 |
Income from Distribution Agre_2
Income from Distribution Agreement Termination - Additional Information (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2020USD ($)Payment | |
Termination agreement remaining inventory | $ 1,000 |
Number of transition payments | Payment | 2 |
Other Income | |
Income from distribution agreement termination | $ 350 |
Subsequent Events - Additional
Subsequent Events - Additional Information (Details) - Church & Dwight - Subsequent Event | Nov. 09, 2020 |
Subsequent Event [Line Items] | |
Distribution agreement non-renewal term | 1 year |
Distribution agreement extended expiration date | Dec. 31, 2021 |
Distribution agreement advance notice period of non-renewal | 120 days |