Exhibit 99.1
Corporate & financial news release
SCOTT’S LIQUID GOLD-INC. REPORTS THIRD QUARTER RESULTS
Third Quarter 2022 Highlights:
GREENWOOD VILLAGE, COLORADO – November 14, 2022 – 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.
Investor Relations Contact:
David Arndt
Chief Financial Officer
303.576.6027