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

Rhea-AI Summary

Scott's Liquid Gold (OTC: SLGD) reported a net loss of $0.5 million for Q1 2022, compared to a loss of $0.3 million in Q1 2021. Net sales decreased to $5.8 million from $9.4 million in the previous year, primarily due to the sale of the Dryel brand and the end of a distribution agreement for Batiste products, impacting revenues by $2.5 million. Supply chain challenges and decreased demand from China also contributed to lower sales figures. Despite these challenges, targeted marketing for Kids N Pets and Messy Pet brands led to slight sales increases.

Positive

• Targeted marketing initiatives for Kids N Pets and Messy Pet brands resulted in slight sales increases.

Negative

• Net sales dropped to $5.8 million from $9.4 million year-over-year.
• Net loss increased to $0.5 million compared to $0.3 million in Q1 2021.
• Sales decline due to discontinuation of Dryel and Batiste brand agreements, a loss of $2.5 million.
• Supply chain issues affected sales of powder booster products.
• Sales of Alpha Skin Care products decreased due to lockdowns in China.
• Increased operating costs due to inflation and high logistics-related expenses.

First Quarter 2022 Highlights:

• First quarter 2022 net sales of $5.8 million vs. $9.4 million in 2021
• Net loss of $0.5 million in Q1 2022 vs. $0.3 million in 2021

GREENWOOD VILLAGE, Colo.--(BUSINESS WIRE)-- Scott’s Liquid Gold-Inc. (OTC: SLGD) today announced results for the three months ended March 31, 2022.

First Quarter Financial Results

In the first quarter of 2022, net sales decreased due to the sale of the Dryel brand and the conclusion of our agreement to distribute Batiste products, which collectively represented $2.5 million in sales in the first quarter of 2021. BIZ sales declined due to supply chain issues with our powder booster products. Sales of our Alpha Skin Care products decreased due to the lockdowns in China, which impacted our ability to export those products. Our Kids N Pets and Messy Pet brands experienced slight increases in sales versus the first quarter of 2021 due to targeted marketing efforts.

Our net loss of $0.5 million was primarily driven by amortization of intangible assets, interest expense, and continued inflationary impacts associated with the manufacture and distribution of our products. In addition to high logistics-related expenses, the rising cost of fuel negatively impacted our inbound and outbound transportation rates.

Management Commentary

“We are proud of our team for their efforts to help mitigate the volatile and challenging environment,” said Tisha Pedrazzini, President of Scott’s. “While inflation continues to impact operating costs and supply chain remains uncertain, we’ve launched new line extensions that we believe set the foundation to deliver on our future growth plans. We continue to focus on both sales growth initiatives and cost structure efficiencies to drive profit improvements in the short and long term.”

SCOTT’S LIQUID GOLD-INC. & SUBSIDIARIES Consolidated Statements of Operations (in thousands, except per share data)
	Three Months Ended March 31,
	2022				2021
Net sales	$	5,790			$	8,844
Cost of sales		2,856				4,840
Gross Profit		2,934				4,004
Operating expenses:
Advertising		135				159
Selling		2,204				2,415
General and administrative		791				1,285
Intangible asset amortization		105				265
Total operating expenses		3,235				4,124
Loss from operations		(301	)			(120	)
Interest expense		(150	)			(35	)
Loss before income taxes and discontinued operations		(451	)			(155	)
Income tax benefit		-				41
Loss from continuing operations		(451	)			(114	)
Loss from discontinued operations, net of taxes		-				(166	)
Net loss	$	(451	)		$	(280	)
Basic and diluted net loss per common shares:
Loss from continuing operations	$	(0.04	)		$	(0.01	)
Loss from discontinued operations	$	-			$	(0.01	)
Net loss	$	(0.04	)		$	(0.02	)
Weighted average shares outstanding:
Basic and diluted		12,739				12,618

SCOTT’S LIQUID GOLD-INC. & SUBSIDIARIES Consolidated Balance Sheets (in thousands, except par value amounts)
	March 31,				December 31,
	2022				2021
Assets
Current assets:
Cash	$	22			$	770
Restricted cash		375				500
Accounts receivable, net		2,399				3,516
Inventories		6,174				5,677
Income taxes receivable		320				320
Prepaid expenses		422				436
Total current assets		9,712				11,219
Property and equipment, net		5				7
Goodwill		1,710				1,710
Intangible assets, net		5,153				5,160
Operating lease right-of-use assets		2,675				2,735
Other assets		38				38
Total assets	$	19,293			$	20,869
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	$	2,289			$	2,647
Accrued expenses		693				747
Current portion of long-term debt		840				1,000
Operating lease liabilities, current portion		259				251
Total current liabilities		4,081				4,645
Long-term debt, net of current portion and debt issuance costs		1,321				1,876
Operating lease liabilities, net of current		2,711				2,780
Other liabilities		27				27
Total liabilities		8,140				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		7,850				7,789
Retained earnings		2,028				2,479
Total shareholders’ equity		11,153				11,541
Total liabilities and shareholders’ equity	$	19,293			$	20,869

SCOTT’S LIQUID GOLD-INC. & SUBSIDIARIES Consolidated Statements of Cash Flows (in thousands)
	March 31,
	2022				2021
Cash flows from operating activities:
Net loss	$	(451	)		$	(280	)
Adjustments to reconcile net loss to net cash (used) provided by operating activities:
Depreciation and amortization		164				453
Stock-based compensation		63				69
Deferred income taxes		-				(97	)
Change in operating assets and liabilities:
Accounts receivable		1,117				(860	)
Inventories		(497	)			(738	)
Prepaid expenses and other assets		14				146
Accounts payable, accrued expenses, and other liabilities		(414	)			1,653
Total adjustments to net loss		447				626
Net cash (used) provided by operating activities		(4	)			346
Cash flows from investing activities:
Purchase of software		(99	)			-
Net cash used in investing activities		(99	)			-
Cash flows from financing activities:
Proceeds from revolving credit facility		8,379				8,730
Repayments of revolving credit facility		(7,899	)			(8,830	)
Repayments of term loan		(1,250	)			(250	)
Net cash used in financing activities		(770	)			(350	)
Net decrease in cash		(873	)			(4	)
Cash and restricted cash, beginning of period		1,270				5
Cash and restricted cash, end of period	$	397			$	1
Cash and restricted cash, end of period associated with discontinued operations	$	-			$	-
Cash and restricted cash, end of period associated with continuing operations	$	397			$	1
Supplemental disclosures:
Cash paid during the period for interest	$	95			$	86

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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20220510006237/en/

David Arndt

Chief Financial Officer

303.576.6027

Source: Scott’s Liquid Gold-Inc.

FAQ

What were the net sales figures for Scott's Liquid Gold in Q1 2022?

Scott's Liquid Gold reported net sales of $5.8 million for Q1 2022.

How does the Q1 2022 net loss compare to Q1 2021 for SLGD?

In Q1 2022, Scott's Liquid Gold reported a net loss of $0.5 million, up from a loss of $0.3 million in Q1 2021.

What caused the decline in net sales for Scott's Liquid Gold in the first quarter?

The net sales decline was primarily due to the sale of the Dryel brand and the conclusion of the Batiste distribution agreement, which previously contributed $2.5 million in sales.

How did supply chain issues impact Scott's Liquid Gold's sales?

Supply chain issues significantly affected the sales of powder booster products, contributing to overall revenue declines.

What marketing strategies led to positive sales for Scott's Liquid Gold?

Targeted marketing efforts for the Kids N Pets and Messy Pet brands resulted in slight increases in sales compared to the previous year.