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

Third Quarter 2022 Highlights:

  • Third quarter 2022 net sales of $4.3 million vs. $8.0 million of net sales in 2021
  • Net loss of $0.7 million in Q3 2022 vs. $2.5 million in 2021

Scott’s Liquid Gold-Inc. (OTC: SLGD) today announced results for the three months ended September 30, 2022.

Third Quarter Financial Results

In the third quarter of 2022, net sales decreased primarily due to the sale of the Dryel brand and the conclusion of our agreement to distribute Batiste products. Sales of our Alpha Skin Care products destined for the China market decreased, as we terminated our relationship with our exclusive distributor in China in the second quarter of 2022. Net sales from other product lines decreased primarily due to changes in our customers’ purchasing strategies related to inventory control measures as well as supply chain challenges with certain BIZ products.

Our net loss decreased versus the prior year due to reductions in various operating expenses and improved margins on the products we sold to our customers. Income tax expense decreased in the third quarter of 2022 versus the same period in 2021 due to the realization of a valuation allowance on our deferred tax asset in 2021.

Management Commentary

“Our team is adapting to the changing environment with our customers’ order patterns and inventory management, and we remain focused on delivering for our retail customers and consumers,” said Tisha Pedrazzini, President of Scott’s. “We expect the operating environment to remain challenging. While our efforts to reduce overhead and operating expenses have been successful, we are committed to further cost reductions and efficiencies to optimize our business.”

SCOTT’S LIQUID GOLD-INC. & SUBSIDIARIES

 

Consolidated Statements of Operations

(in thousands, except per share data)

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

September 30,

 

 

September 30,

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Net sales

$

4,277

 

 

$

7,970

 

 

$

15,449

 

 

$

24,583

 

Cost of sales

 

2,358

 

 

 

5,100

 

 

 

8,337

 

 

 

14,624

 

Gross profit

 

1,919

 

 

 

2,870

 

 

 

7,112

 

 

 

9,959

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

Advertising

 

166

 

 

 

144

 

 

 

492

 

 

 

506

 

Selling

 

1,691

 

 

 

2,542

 

 

 

5,752

 

 

 

7,388

 

General and administrative

 

578

 

 

 

836

 

 

 

2,020

 

 

 

3,782

 

Intangible asset amortization

 

87

 

 

 

278

 

 

 

313

 

 

 

834

 

Impairment of goodwill and intangible assets

 

-

 

 

 

-

 

 

 

3,589

 

 

 

-

 

Total operating expenses

 

2,522

 

 

 

3,800

 

 

 

12,166

 

 

 

12,510

 

Loss from operations

 

(603

)

 

 

(930

)

 

 

(5,054

)

 

 

(2,551

)

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

(139

)

 

 

(109

)

 

 

(419

)

 

 

(219

)

Loss before income taxes and discontinued operations

 

(742

)

 

 

(1,039

)

 

 

(5,473

)

 

 

(2,770

)

Income tax expense

 

(2

)

 

 

(1,224

)

 

 

(55

)

 

 

(798

)

Loss from continuing operations

 

(744

)

 

 

(2,263

)

 

 

(5,528

)

 

 

(3,568

)

Loss from discontinued operations, net of taxes

 

-

 

 

 

(205

)

 

 

-

 

 

 

(246

)

Net loss

$

(744

)

 

$

(2,468

)

 

$

(5,528

)

 

$

(3,814

)

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted net loss per common shares:

 

 

 

 

 

 

 

 

 

 

 

Loss from continuing operations

$

(0.06

)

 

$

(0.18

)

 

$

(0.43

)

 

$

(0.28

)

Loss from discontinued operations

$

-

 

 

$

(0.02

)

 

$

-

 

 

$

(0.02

)

Net loss

$

(0.06

)

 

$

(0.20

)

 

$

(0.43

)

 

$

(0.30

)

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted

 

12,749

 

 

 

12,642

 

 

 

12,747

 

 

 

12,628

 

SCOTT’S LIQUID GOLD-INC. & SUBSIDIARIES

 

Consolidated Balance Sheets

(in thousands, except par value amounts)

 

 

September 30,

 

 

December 31,

 

 

2022

 

 

2021

 

Assets

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash

$

14

 

 

$

770

 

Restricted cash

 

125

 

 

 

500

 

Accounts receivable, net

 

1,791

 

 

 

3,516

 

Inventories

 

6,289

 

 

 

5,677

 

Income taxes receivable

 

247

 

 

 

320

 

Prepaid expenses

 

214

 

 

 

436

 

Total current assets

 

8,680

 

 

 

11,219

 

 

 

 

 

 

 

Property and equipment, net

 

3

 

 

 

7

 

Goodwill

 

838

 

 

 

1,710

 

Intangible assets, net

 

2,272

 

 

 

5,160

 

Operating lease right-of-use assets

 

2,553

 

 

 

2,735

 

Other assets

 

38

 

 

 

38

 

Total assets

$

14,384

 

 

$

20,869

 

 

 

 

 

 

 

Liabilities and Shareholders’ Equity

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

$

1,750

 

 

$

2,647

 

Accrued expenses

 

397

 

 

 

747

 

Current portion of long-term debt

 

2,684

 

 

 

1,000

 

Operating lease liabilities, current portion

 

264

 

 

 

251

 

Total current liabilities

 

5,095

 

 

 

4,645

 

 

 

 

 

 

 

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

 

555

 

 

 

1,876

 

Operating lease liabilities, net of current

 

2,581

 

 

 

2,780

 

Other liabilities

 

27

 

 

 

27

 

Total liabilities

 

8,258

 

 

 

9,328

 

 

 

 

 

 

 

Shareholders’ equity:

 

 

 

 

 

Preferred Stock, no par value, authorized 20,000 shares; no shares issued and outstanding

 

-

 

 

 

-

 

Common Stock; $0.10 par value, authorized 50,000 shares; issued and outstanding 12,749 shares (2022) and 12,727 shares (2021)

 

1,275

 

 

 

1,273

 

Capital in excess of par

 

7,900

 

 

 

7,789

 

(Accumulated deficit) retained earnings

 

(3,049

)

 

 

2,479

 

Total shareholders’ equity

 

6,126

 

 

 

11,541

 

Total liabilities and shareholders’ equity

$

14,384

 

 

$

20,869

 

SCOTT’S LIQUID GOLD-INC. & SUBSIDIARIES

 

Consolidated Statements of Cash Flows

(in thousands)

 

 

Nine Months Ended

 

 

September 30,

 

 

2022

 

 

2021

 

Cash flows from operating activities:

 

 

 

 

 

Net loss

$

(5,528

)

 

$

(3,568

)

Adjustments to reconcile net loss to net cash used by operating activities:

 

 

 

 

 

Depreciation and amortization

 

480

 

 

 

1,357

 

Stock-based compensation

 

113

 

 

 

99

 

Deferred income taxes

 

-

 

 

 

784

 

Impairment of goodwill and intangible assets

 

3,589

 

 

 

-

 

Change in operating assets and liabilities:

 

 

 

 

 

Accounts receivable

 

1,725

 

 

 

228

 

Inventories

 

(612

)

 

 

(2,651

)

Prepaid expenses and other assets

 

222

 

 

 

175

 

Income taxes receivable

 

73

 

 

 

192

 

Accounts payable, accrued expenses, and other liabilities

 

(1,251

)

 

 

1,990

 

Total adjustments to net loss

 

4,339

 

 

 

2,174

 

Net cash used in operating activities

 

(1,189

)

 

 

(1,394

)

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

Purchase of software

 

(142

)

 

 

(262

)

Net cash used in investing activities

 

(142

)

 

 

(262

)

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

Repayments on term loans

 

(2,000

)

 

 

(750

)

Proceeds from revolving credit facility

 

20,763

 

 

 

29,824

 

Repayments of revolving credit facility

 

(18,563

)

 

 

(27,222

)

Proceeds from exercise of stock options

 

-

 

 

 

57

 

Net cash provided by financing activities

 

200

 

 

 

1,909

 

 

 

 

 

 

 

Net (decrease) increase in cash and restricted cash

 

(1,131

)

 

 

253

 

 

 

 

 

 

 

Cash and restricted cash, beginning of period

 

1,270

 

 

 

5

 

Cash and restricted cash, end of period

$

139

 

 

$

258

 

 

 

 

 

 

 

Supplemental disclosures:

 

 

 

 

 

Cash paid during the period for interest

$

256

 

 

$

372

 

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. exists to positively impact consumers’ lives in the markets we serve while creating shareholder value. We develop, market, and sell high-quality, high-value household and health and beauty care products nationally and internationally to mass merchandisers, drugstores, supermarkets, hardware stores, e-commerce retailers, other retail outlets, and to wholesale distributors.

Contacts

Investor Relations Contact:

David Arndt

Chief Financial Officer

303.576.6027

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