Scott’s Liquid Gold-Inc. Reports 2020 Results
Scott’s Liquid Gold (OTC: SLGD) reported its 2020 operating results, highlighting both achievements and challenges. CEO Mark Goldstein noted the company's transition to an asset-light model, integrating acquisitions like Kids-N-Pets, Biz, and Dryel. Despite a net loss of $1.5 million due to supply chain disruptions and impairments, improved cash flow was observed from reduced inventory and outsourcing. The company anticipates growth opportunities in 2021, while acknowledging ongoing raw material delays. Additionally, they amended loan agreements for increased flexibility during these challenges.
- Increased net sales attributed to acquisitions of Kids N Pets, Biz, and Dryel.
- Improved operating cash flow due to reduced finished goods inventory and decreased production costs.
- Net loss of $1.5 million driven by impairments and acquisition-related expenses.
- Supply chain challenges impacting sales and production efficiency.
Scott’s Liquid Gold-Inc. (OTC: SLGD) today announced operating results for the year ended December 31, 2020.
President and Chief Executive Officer Mark Goldstein stated, “In 2020, we took significant steps to transform and grow our business for the long term. I am proud of the job the team did on its execution of these important strategic initiatives, as well as how the team responded to pandemic driven challenges.
“In addition to outsourcing our production and moving to an asset-light model, in 2020 we fully integrated our newly acquired Kids-N-Pets Brands and also added Biz and Dryel to our family of high-quality, high-value brands. We battled severe raw material and container delays throughout the second half of the year. Our improved gross margins helped offset lower sales, which resulted from these supply chain issues, as well as from lower store traffic and work from home trends.
“Our 2020 results and profitability were negatively impacted by planned charges related to our supply chain transition and acquisition expenses. We also incurred impairment expenses in the fourth quarter as lower second half sales and supply chain shortages prevented us from utilizing raw materials before their expiration.
“We continue to experience supply chain delays for raw materials and containers, as well as overall production slippage from the recent severe winter weather. Despite those headwinds, we are optimistic about improved results for 2021, as well as our longer-term strategy. We see strong opportunities for growth in our Alpha, Kids N Pets, and Liquid Gold brands, as well as further cost efficiencies once supply chains stabilize. Execution on this strategy will drive stronger cash flow generation and shareholder value.”
Chief Financial Officer and Director Kevin A. Paprzycki added, “Given the supply chain and production challenges we continue to face in 2021, we proactively worked with our financial partner UMB to negotiate additional flexibility with our loan covenants for the year. We are greatly appreciative of UMB’s support as we work through these pandemic and weather-related supply issues.”
In February, our shareholder rights plan expired and the board determined not to renew it.
Net Sales
Net sales increased during 2020 due to our Kids N Pets, Biz and Dryel acquisitions, but a decent portion of the benefit from those transactions was offset by COVID-related impacts. Decreased foot traffic in stores selling our hair and skin care products, work-from-home trends impacting dry shampoo and drying cleaning usage, and supply chain shortages and delays leading to missed distribution opportunities, hindered our full net sales growth potential.
Net Loss
Our net loss of
Cash Flow
We had improvement in our operating cash flow primarily driven by the reduction of finished goods inventory we had built up for our supply chain transition. Our Kids N Pets, Biz, and Dryel acquisitions, as well as decreased production costs associated with outsourcing, also contributed to our increased cash flow.
On March 26, 2021, we amended our Loan Agreement with UMB with the First Amendment to Loan and Security Agreement (“First Amendment”) to provide additional covenant flexibility as a result of pandemic related supply chain issues. The First Amendment is effective as of December 31, 2020. The Company’s fixed charge coverage ratio, applicable for the months ending August 31, 2021 through December 31, 2021, on a trailing 12-month basis, and net equity covenant targets were modified and the interest rate for both our revolving credit facility and term loan will increase by
About Scott’s Liquid Gold-Inc.
Scott’s Liquid Gold-Inc. develops, markets, and sells high-quality, high-value household and personal care products nationally and internationally to mass merchandisers, drugstores, supermarkets, hardware stores, e-commerce retailers, other retail outlets, and to wholesale distributors. Over the last 65+ years we have developed a reputation for delivering products that consumers know and trust.
Our flagship product, Scott’s Liquid Gold® Wood Care, is a leader in its category and is known for bringing life back to and protecting all types of natural wood surfaces. Our Kids N Pets® brands are award winning, safe, stain and odor removing products targeted toward households with children and pets. Our newly acquired Biz and Dryel are top performing laundry care products, with Biz being a top stain removing laundry additive, and Dryel being the market leader in at-home dry cleaning.
Scott’s Liquid Gold-Inc. also owns Neoteric Cosmetics, a personal care company with a rich history of offering products that deliver high-quality, proven results that customers expect. Neoteric’s personal care products are embraced and respected by both medical profession
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