EXHIBIT 99.1 |
Corporate & financial news release |
SCOTT’S LIQUID GOLD-INC. REPORTS 2021 RESULTS
2021 Results and Highlights:
Fourth quarter:
| • | Fourth quarter 2021 net sales of $8.9 million vs. $9.1 million in 2020 |
| • | Net loss of $7.3 million in Q4 2021, including: |
| o | $6.3 million impairment charges on goodwill and intangible assets |
| o | $0.8 million loss on sale of Dryel brand |
Fiscal year:
| • | Net sales of $35.9 million in 2021 vs. $30.2 million in 2020 |
| • | Net loss of $11.1 million, including: |
| o | $7.1 million in Q4 impairment charges and loss on sale of Dryel |
| o | $0.8 million tax expense driven by $3.1 million valuation allowance of deferred tax asset |
| o | $0.8 million in restructuring costs |
| o | $0.4 million impairment of inventories |
GREENWOOD VILLAGE, COLORADO – March 31, 2022 – Scott’s Liquid Gold-Inc. (OTC: SLGD) today announced results for the year ended December 31, 2021.
Financial Results
Fourth Quarter
In the fourth quarter of 2021, net sales remained generally consistent with the same period in 2020. Sales growth in 2021 of Alpha Skin Care, Denorex, and Batiste were offset by lower sales of Scott’s Liquid Gold, Kids N Pets, and Prell.
Our net loss of $7.3 million was primarily driven by non-cash and one-time impairment charges to goodwill and intangible assets. The impairment charges resulted from our review of carrying values of goodwill and certain intangible assets triggered by revisions to our internal forecasts relating to all reporting units, primarily driven by our sale of Dryel and the impact of rising costs associated with the manufacture and distribution of our products. We continued to experience increases in logistics-related expenses driven by supply chain disruptions and shipping delays.
Fiscal Year 2021
Fiscal year 2021 results showed an increase in net sales related to our acquisitions of BIZ and Dryel in 2020, as well as growth in our Alpha Skin Care and Denorex brands.
Our net loss was primarily driven by non-cash and one-time expenses, as well as from amortization and increased interest expense. Our results were further impacted by increases in supply chain- and logistics-related costs that offset our growth in gross profit.
Management Commentary
“In 2021, we continued to face supply chain disruptions that impacted sales and increased logistics costs,” said Tisha Pedrazzini, President of Scott’s. “Despite these challenges, we made progress in reducing overhead expenses and simplifying our supply chain and 3PL networks. We have positioned our highest potential brands for growth by focusing on innovation with new products recently launched on Amazon.”
Dan Roller, Chairman of the Board, commented, “One of our key strategic priorities has been evaluating and optimizing Scott’s portfolio of brands. We made a key step towards this goal in the fourth quarter of 2021 with our sale of the Dryel brand, the proceeds of which we used to reduce net debt. The board and management continue to evaluate our portfolio with the goal of maximizing our Company’s long-term value.”
SCOTT’S LIQUID GOLD-INC. & SUBSIDIARIES
Consolidated Statements of Operations
(in thousands, except per share data)
| Year Ended |
| |||||
| December 31, |
| |||||
| 2021 |
|
| 2020 |
| ||
Net sales | $ | 33,081 |
|
| $ | 28,958 |
|
Cost of sales |
| 19,082 |
|
|
| 16,433 |
|
Impairment of inventories |
| 404 |
|
|
| 876 |
|
Total cost of sales |
| 19,486 |
|
|
| 17,309 |
|
Gross Profit |
| 13,595 |
|
|
| 11,649 |
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
Advertising |
| 639 |
|
|
| 702 |
|
Selling |
| 9,797 |
|
|
| 7,546 |
|
General and administrative |
| 4,611 |
|
|
| 4,724 |
|
Intangible asset amortization |
| 1,111 |
|
|
| 1,005 |
|
Impairment of goodwill and intangible assets |
| 6,294 |
|
|
| - |
|
Impairment of property and equipment |
| - |
|
|
| 107 |
|
Total operating expenses |
| 22,452 |
|
|
| 14,084 |
|
Loss from operations |
| (8,857 | ) |
|
| (2,435 | ) |
|
|
|
|
|
|
|
|
Interest expense |
| (373 | ) |
|
| (216 | ) |
Other income |
| - |
|
|
| 350 |
|
Loss before income taxes and discontinued operations |
| (9,230 | ) |
|
| (2,301 | ) |
Income tax (expense) benefit |
| (1,008 | ) |
|
| 707 |
|
Loss from continuing operations |
| (10,238 | ) |
|
| (1,594 | ) |
(Loss) income from discontinued operations, net of taxes |
| (853 | ) |
|
| 43 |
|
Net loss | $ | (11,091 | ) |
| $ | (1,551 | ) |
|
|
|
|
|
|
|
|
Basic and diluted net loss per common shares: |
|
|
|
|
|
|
|
Loss from continuing operations | $ | (0.81 | ) |
| $ | (0.13 | ) |
Loss from discontinued operations | $ | (0.07 | ) |
| $ | 0.00 |
|
Net loss | $ | (0.88 | ) |
| $ | (0.13 | ) |
|
|
|
|
|
|
|
|
Weighted average shares outstanding: |
|
|
|
|
|
|
|
Basic and diluted |
| 12,678 |
|
|
| 12,635 |
|
SCOTT’S LIQUID GOLD-INC. & SUBSIDIARIES
Consolidated Balance Sheets
(in thousands, except par value amounts)
| December 31, |
|
| December 31, |
| ||
| 2021 |
|
| 2020 |
| ||
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
Cash | $ | 770 |
|
| $ | 5 |
|
Restricted cash |
| 500 |
|
|
| - |
|
Accounts receivable, net |
| 3,516 |
|
|
| 4,512 |
|
Inventories |
| 5,677 |
|
|
| 3,808 |
|
Income taxes receivable |
| 320 |
|
|
| 535 |
|
Prepaid expenses |
| 436 |
|
|
| 596 |
|
Other current assets |
| - |
|
|
| 112 |
|
Current assets associated with discontinued operations |
| - |
|
|
| 180 |
|
Total current assets |
| 11,219 |
|
|
| 9,748 |
|
|
|
|
|
|
|
|
|
Property and equipment, net |
| 7 |
|
|
| 18 |
|
Deferred tax asset, net |
| - |
|
|
| 969 |
|
Goodwill |
| 1,710 |
|
|
| 3,823 |
|
Intangible assets, net |
| 5,160 |
|
|
| 9,984 |
|
Operating lease right-of-use assets |
| 2,735 |
|
|
| 2,985 |
|
Other assets |
| 38 |
|
|
| 38 |
|
Long-term assets associated with discontinued operations |
| - |
|
|
| 5,991 |
|
Total assets | $ | 20,869 |
|
| $ | 33,556 |
|
|
|
|
|
|
|
|
|
Liabilities and Shareholders’ Equity |
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
Accounts payable | $ | 2,647 |
|
| $ | 1,799 |
|
Accrued expenses |
| 747 |
|
|
| 296 |
|
Current portion of long-term debt |
| 1,000 |
|
|
| 1,000 |
|
Operating lease liabilities, current portion |
| 251 |
|
|
| 249 |
|
Other current liabilities |
| - |
|
|
| 67 |
|
Total current liabilities |
| 4,645 |
|
|
| 3,411 |
|
|
|
|
|
|
|
|
|
Long-term debt, net of current portion and debt issuance costs |
| 1,876 |
|
|
| 4,521 |
|
Operating lease liabilities, net of current |
| 2,780 |
|
|
| 3,032 |
|
Other liabilities |
| 27 |
|
|
| 127 |
|
Total liabilities |
| 9,328 |
|
|
| 11,091 |
|
|
|
|
|
|
|
|
|
Shareholders’ equity: |
|
|
|
|
|
|
|
Preferred stock, no par value, authorized 20,000 shares; no shares issued and outstanding |
| - |
|
|
| - |
|
Common stock; $0.10 par value, authorized 50,000 shares; issued and outstanding 12,727 shares (2021) and 12,618 shares (2020) |
| 1,273 |
|
|
| 1,262 |
|
Capital in excess of par |
| 7,789 |
|
|
| 7,633 |
|
Retained earnings |
| 2,479 |
|
|
| 13,570 |
|
Total shareholders’ equity |
| 11,541 |
|
|
| 22,465 |
|
Total liabilities and shareholders’ equity | $ | 20,869 |
|
| $ | 33,556 |
|
SCOTT’S LIQUID GOLD-INC. & SUBSIDIARIES
Consolidated Statements of Cash Flows
(in thousands)
| Year Ended |
| |||||
| December 31, |
| |||||
| 2021 |
|
| 2020 |
| ||
Cash flows from operating activities: |
|
|
|
|
|
|
|
Net loss | $ | (11,091 | ) |
| $ | (1,551 | ) |
Adjustments to reconcile net loss to net cash (used) provided by operating activities: |
|
|
|
|
|
|
|
Depreciation and amortization |
| 1,820 |
|
|
| 1,430 |
|
Stock-based compensation |
| 110 |
|
|
| 332 |
|
Deferred income taxes |
| 784 |
|
|
| (229 | ) |
Loss on disposal of discontinued operations |
| 834 |
|
|
| - |
|
Impairment of equipment |
| - |
|
|
| 107 |
|
Impairment of inventories |
| 404 |
|
|
| 876 |
|
Impairment of goodwill and intangible assets |
| 6,294 |
|
|
| - |
|
Change in operating assets and liabilities: |
|
|
|
|
|
|
|
Accounts receivable |
| 996 |
|
|
| (1,817 | ) |
Inventories |
| (2,093 | ) |
|
| 4,256 |
|
Prepaid expenses and other assets |
| 272 |
|
|
| (323 | ) |
Income taxes receivable |
| 215 |
|
|
| 170 |
|
Accounts payable, accrued expenses, and other liabilities |
| 1,133 |
|
|
| 331 |
|
Total adjustments to net loss |
| 10,769 |
|
|
| 5,133 |
|
Net cash (used) provided by operating activities |
| (322 | ) |
|
| 3,582 |
|
|
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
Acquisition |
| - |
|
|
| (10,529 | ) |
Purchase of software |
| (469 | ) |
|
| - |
|
Proceeds from sale of discontinued operations |
| 4,850 |
|
|
| - |
|
Purchase of property and equipment |
| - |
|
|
| (17 | ) |
Proceeds from sale of property and equipment |
| - |
|
|
| 500 |
|
Cash paid for leasehold improvements |
| - |
|
|
| (484 | ) |
Reimbursement of leasehold improvements |
| - |
|
|
| 433 |
|
Net cash provided by (used in) investing activities |
| 4,381 |
|
|
| (10,097 | ) |
|
|
|
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
Proceeds from revolving credit facility |
| 40,677 |
|
|
| 16,995 |
|
Repayments of revolving credit facility |
| (43,885 | ) |
|
| (13,573 | ) |
Proceeds from term loan |
| 2,000 |
|
|
| 3,000 |
|
Repayments of term loan |
| (1,583 | ) |
|
| (417 | ) |
Payments for debt issuance costs |
| (60 | ) |
|
| (646 | ) |
Proceeds from PPP loan |
| - |
|
|
| 600 |
|
Repayment of PPP loan |
| - |
|
|
| (600 | ) |
Proceeds from exercise of stock options |
| 57 |
|
|
| 67 |
|
Net cash (used in) provided by financing activities |
| (2,794 | ) |
|
| 5,426 |
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash |
| 1,265 |
|
|
| (1,089 | ) |
|
|
|
|
|
|
|
|
Cash and restricted cash, beginning of period |
| 5 |
|
|
| 1,094 |
|
Cash and restricted cash, end of period | $ | 1,270 |
|
| $ | 5 |
|
|
|
|
|
|
|
|
|
Cash and restricted cash, end of period associated with discontinued operations | $ | - |
|
| $ | - |
|
Cash and restricted cash, end of period associated with continuing operations | $ | 1,270 |
|
| $ | 5 |
|
|
|
|
|
|
|
|
|
Supplemental disclosures: |
|
|
|
|
|
|
|
Cash paid during the period for interest | $ | 564 |
|
| $ | 183 |
|
Note Regarding Forward-Looking Statements
This news release may contain "forward-looking statements" within the meaning of the federal securities laws that are intended to qualify for the Safe Harbor from liability established by the Private Securities Litigation Reform Act of 1995. "Forward-looking statements" generally can be identified by the use of forward-looking terminology such as "assumptions," "target," "guidance," “strategy,” "outlook," "plans," "projection," "may," "will," "would," "expect," "intend," "estimate," "anticipate," "believe”, "potential," or "continue" (or the negative or other derivatives of each of these terms) or similar terminology.
Forward-looking statements convey our expectations, intentions, or forecasts about future events, circumstances, or results. All forward-looking statements, by their nature, are subject to assumptions, risks, and uncertainties, which may change over time and many of which are beyond our control. You should not rely on any forward-looking statement as a prediction or guarantee about the future. Actual future objectives, strategies, plans, prospects, performance, conditions, or results may differ materially from those set forth in any forward-looking statement. Some of the factors that may cause actual results or other future events or circumstances to differ from those in forward-looking statements are described in the Company's Annual Report on Form 10-K for the year ended December 31, 2021 and the Company's subsequent Quarterly Reports on Form 10-Q and other periodic reports filed with the Securities and Exchange Commission. Any forward-looking statement made by us or on our behalf speaks only as of the date that it was made. We do not undertake to update any forward-looking statement to reflect the impact of events, circumstances, or results that arise after the date that the statement was made, except as required by applicable securities laws. You, however, should consult further disclosures (including disclosures of a forward-looking nature) that we may make in any subsequent filings with the Securities and Exchange Commission.
About Scott’s Liquid Gold-Inc.
Scott’s Liquid Gold-Inc. (SLG-Inc.) is a leading manufacturer and marketer of consumer products sold nationally and internationally to retail channels over the last 70 years. SLG-Inc. markets and distributes some of the most trusted and recognized consumer brand names, including its namesake wood cleaning products; Alpha Skin Care®; Kids N Pets®; Messy Pet®; BIZ®; Denorex®; Prell® and other brands.
Investor Relations Contact:
David Arndt
Chief Financial Officer
303.576.6027