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

Rhea-AI Summary

Scott's Liquid Gold (OTC: SLGD) reported second-quarter results for 2021, showcasing a net sales increase of 38% to $8.4 million, up from $6.1 million a year earlier. This growth was fueled by the BIZ and Dryel brands and a recovery in Batiste sales post-COVID-19 impact. However, the company faced a net loss of $1.1 million, largely due to $0.8 million in one-time restructuring charges and ongoing supply chain issues affecting key products. Management aims to enhance profitability through cost-cutting measures and improved efficiency.

Positive

• Net sales increased 38% to $8.4 million compared to $6.1 million in Q2 2020.
• Growth driven by BIZ and Dryel brands and recovery in Batiste sales.
• Inventory has been rebuilt, indicating improved product availability.
• Management implementing measures to reduce costs and improve working capital efficiency.

Negative

• Net loss of $1.1 million primarily due to one-time restructuring charges of $0.8 million.
• Sales impacted by supply chain shortages of cans and components, especially for Scott's Liquid Gold.
• Increased costs and logistics expenses related to COVID-19 disruptions.

Scott’s Liquid Gold-Inc. (OTC: SLGD) today announced operating results for the three months ended June 30, 2021.

“This is a transition year for Scott’s, and we continue to review all aspects of our business with an eye towards growth and profitability,” said Tisha Pedrazzini, Interim Co-President of Scott’s Liquid Gold. "We have identified several key brands that we aim to accelerate via new consumer messaging, brand packaging, and go-to-market strategies. Our portfolio is filled with products that consumers love, as evidenced by best-in-class ratings and reviews. We are working to drive increased awareness of these brands with new digital, social, and grassroots campaigns this fall.”

“While logistics and supply chain challenges impacted sales in the second quarter, we have rebuilt inventory and are back in stock on all major products,” said Kevin Paprzycki, Scott’s CFO and Interim Co-President. “We are taking actions to improve our profitability by reducing selling costs, reducing G&A expenses, and improving working capital efficiency, which we believe will start to be reflected in our financial results in the second half of the year. Given the inflationary backdrop, we have fine-tuned pricing and continue to work to be an efficient and easy partner with which to do business.”

Second Quarter Financial Results

In the second quarter of 2021, net sales increased 38% to $8.4 million compared to $6.1 million in the same period in 2020. The growth was driven by the BIZ and Dryel brands, which were acquired in July 2020, and by a rebound in Batiste sales in 2021, where the second quarter of 2020 was unfavorably impacted by COVID-19. Sales in the second quarter of 2021 were affected by supply chain shortages of cans, components, and other raw materials, particularly with our Scott’s Liquid Gold brand.

Our net loss of $1.1 million was primarily driven by one-time restructuring charges of $0.8 million from severance payments. In addition, our operating results were also affected by supply chain shortages of certain key products including our Scott’s Liquid Gold brand. We are also experiencing increases in costs of our products and logistics-related expenses, primarily driven by COVID-related supply chain disruptions and product delays.

About Scott’s Liquid Gold-Inc.

Scott's Liquid Gold-Inc. and its trusted brands have been a part of consumers' lives for over 70 years. Our products deliver high-quality, proven results that are supported by best-in-class consumer ratings and reviews. Our portfolio includes some of the most trusted and recognized consumer brand names, including our namesake Scott’s Liquid Gold wood care products, as well as Kids N Pets, Dryel, Biz Stain Fighter, Denorex, Prell, and Alpha Skin Care. We are also the current American specialty channel distributor for Batiste Dry Shampoo.

SCOTT’S LIQUID GOLD-INC. & SUBSIDIARIES Consolidated Statements of Operations (in thousands, except per share data)
	Three Months Ended								Six Months Ended
	June 30,								June 30,
	2021				2020				2021				2020
Net sales	$	8,451			$	6,083			$	17,884			$	13,937
Cost of sales		4,929				3,215				10,225				7,605
Gross Profit		3,522				2,868				7,659				6,332
Operating expenses:
Advertising		203				141				362				362
Selling		2,518				1,614				5,069				3,203
General and administrative		1,687				1,293				2,972				2,487
Intangible asset amortization		387				210				775				420
Total operating expenses		4,795				3,258				9,178				6,472
(Loss) income from operations		(1,273	)			(390	)			(1,519	)			(140	)
Interest income		-				2				-				3
Interest expense		(175	)			(74	)			(309	)			(78	)
Income from distribution agreement termination		-				350				-				350
(Loss) income before income taxes		(1,448	)			(112	)			(1,828	)			135
Income tax benefit		382				34				482				64
Net (loss) income	$	(1,066	)		$	(78	)		$	(1,346	)		$	199
Net (loss) income per common share
Basic	$	(0.08	)		$	(0.01	)		$	(0.11	)		$	0.02
Diluted	$	(0.08	)		$	(0.01	)		$	(0.11	)		$	0.02
Weighted average shares outstanding
Basic		12,618				12,462				12,618				12,462
Diluted		12,618				12,462				12,618				12,571

SCOTT’S LIQUID GOLD-INC. & SUBSIDIARIES Consolidated Balance Sheets (in thousands, except par value amounts)
	June 30,				December 31,
	2021				2020
Assets
Current assets:
Cash and cash equivalents	$	20			$	5
Accounts receivable, net		4,723				4,512
Inventories, net		6,770				3,988
Income taxes receivable		513				535
Prepaid expenses		542				596
Other current assets		-				112
Total current assets		12,568				9,748
Property and equipment, net		12				18
Deferred tax asset		1,287				784
Goodwill		5,280				5,280
Intangible assets, net		14,014				14,703
Operating lease right-of-use assets		2,857				2,985
Other assets		38				38
Total assets	$	36,056			$	33,556
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	$	4,036			$	1,799
Accrued expenses		999				296
Current portion of long-term debt		1,000				1,000
Operating lease liabilities, current portion		245				249
Other current liabilities		67				67
Total current liabilities		6,347				3,411
Long-term debt, net of current portion and debt issuance costs		5,451				4,521
Operating lease liabilities, net of current		2,908				3,032
Other liabilities		129				127
Total liabilities		14,835				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 12,618 shares (2021) and 12,618 shares (2020)		1,262				1,262
Capital in excess of par		7,735				7,633
Retained earnings		12,224				13,570
Total shareholders’ equity		21,221				22,465
Total liabilities and shareholders’ equity	$	36,056			$	33,556

SCOTT’S LIQUID GOLD-INC. & SUBSIDIARIES Consolidated Statements of Cash Flows (in thousands)
	Six Months Ended
	June 30,
	2021				2020
Cash flows from operating activities:
Net (loss) income	$	(1,346	)		$	199
Adjustments to reconcile net (loss) income to net cash provided (used) by operating activities:
Depreciation and amortization		905				522
Stock-based compensation		102				71
Deferred income taxes		(503	)			65
Change in operating assets and liabilities:
Accounts receivable		(211	)			156
Inventories		(2,782	)			2,905
Prepaid expenses and other assets		166				42
Income taxes receivable		22				322
Accounts payable, accrued expenses, and other liabilities		2,942				296
Total adjustments to net (loss) income		641				4,379
Net cash (used) provided by operating activities		(705	)			4,578
Cash flows from investing activities:
Purchase of software		(113	)			-
Purchase of property and equipment		-				(17	)
Proceeds from sale of property and equipment		-				500
Cash paid for leasehold improvements		-				(247	)
Reimbursement of leasehold improvements		-				110
Net cash (used in) provided by investing activities		(113	)			346
Cash flows from financing activities:
Proceeds from revolving credit facility		19,517				-
Repayments of revolving credit facility		(18,184	)			-
Repayments of term loan		(500	)			-
Payments for debt issuance costs		-				(141	)
Proceeds from PPP loan		-				600
Repayment of PPP loan		-				(600	)
Net cash provided by (used in) financing activities		833				(141	)
Net increase in cash and cash equivalents		15				4,783
Cash and cash equivalents, beginning of period		5				1,094
Cash and cash equivalents, end of period	$	20			$	5,877
Supplemental disclosures:
Cash paid during the period for interest	$	212			$	-

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, 2020 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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20210813005003/en/

FAQ

What were Scott's Liquid Gold's second quarter 2021 sales results?

Scott's Liquid Gold reported net sales of $8.4 million in Q2 2021, a 38% increase from $6.1 million in the same period in 2020.

What caused the net loss for Scott's Liquid Gold in Q2 2021?

The net loss of $1.1 million was primarily due to one-time restructuring charges of $0.8 million and supply chain shortages.

How is Scott's Liquid Gold addressing supply chain challenges?

Scott's Liquid Gold has rebuilt its inventory and is back in stock on all major products, while also implementing cost-reduction measures.

What brands contributed to Scott's Liquid Gold's sales growth?

The BIZ and Dryel brands, acquired in July 2020, along with a rebound in Batiste sales, contributed significantly to the sales growth.

What strategies is Scott's Liquid Gold implementing for growth?

The company is focusing on new consumer messaging, brand packaging, and enhanced go-to-market strategies.