Scott’s Liquid Gold Reports First Quarter Results

First Quarter Highlights:

  • Net loss of $0.3 million ($0.03 per share)
  • Generated cash flow from operations of $0.5 million
  • Net cash increased $0.4 million during the quarter to $6.6 million

DENVER–(BUSINESS WIRE)–Scott’s Liquid Gold-Inc. (OTC: SLGD) today announced operating results
for the three months ended March 31, 2019.

We saw slow sales in Q1, driven by both seasonality and challenging
market conditions for our distributed products,” stated President and
Chief Executive Officer Mark Goldstein. “Despite regulatory and tariff
pressure on our China business, we did manage to grow our Alpha Skin
Care brand during Q1.”

Similar to last year, we expect our sales to increase over the
remainder of 2019. We are highly focused on long-term sales growth, both
through line extensions of our proven brands as well as continued
success in our online sales initiatives. The team also continued to make
solid progress in working capital improvement during the first quarter.”

Net sales

Net sales for the three months ended March 31, 2019, decreased 8.4%, or
$0.6 million, to approximately $6.8 million. Sales in the Skin and Hair
Care segment decreased 7.8% as strong Alpha® Skin Care
product sales were offset by a decrease in sales for both Batiste Dry
Shampoo and 7th Heaven skin care products. Sales of Batiste
were affected after a strong fourth quarter of 2018, and 7th
Heaven products continue to face increased competition. Sales in the
Household segment decreased 10.8% due to the discontinuation of our
Touch of Scent® products. The decrease was also driven by
increased competition facing our Scott’s Liquid Gold® Wood
Care products.

Net Income and Earnings Per Share

Our net loss for the three months ended March 31, 2019 was $0.3 million
compared to $0.2 million for the three months ended March 31, 2018. This
resulted in a net loss per common share of $0.03 in the first quarter of
2019 compared to a net loss per share of $0.02 in the same period in
2018. The net loss increased primarily due to lower sales and was
partially offset by reductions in advertising costs.

Cash Flows

Cash flows from operating activities was $0.5 million for the three
months ended March 31, 2019, as compared to cash flows used in operating
activities of $0.1 million for the same period in 2018. Despite the
decrease in net income, cash flow from operations improved due to our
continued efforts to reduce inventories.

About Scott’s Liquid Gold-Inc.

Scott’s Liquid Gold-Inc. is an American manufacturing and distribution
company with a strong belief that Made in America is something to be
proud of. Over the last 65+ years we have developed a reputation for
delivering high-quality, innovative products that consumers know and

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.

Scott’s Liquid Gold-Inc. also owns Neoteric Cosmetics, a skin and hair
care company with a rich history of offering products that deliver
high-quality, proven results that customers expect. Neoteric’s skin and
hair care products are embraced and respected by both medical
professionals and consumers alike and include brands such as Alpha®
Skin Care, Prell®, and Denorex®. Neoteric
Cosmetics is also the proud American distributor of 7th
Heaven skin care products and the specialty channel distributor for
Batiste Dry Shampoo.

Consolidated Statements of Income (Unaudited)

(in thousands, except per share data)

Three Months Ended
March 31,
2019   2018
Net sales $ 6,805 $ 7,428
Cost of sales   4,200   4,407
Gross Profit 2,605 3,021
Operating expenses:
Advertising 184 537
Selling 1,658 1,632
General and administrative   1,223   1,093
Total operating expenses   3,065   3,262
Income (loss) from operations (460 ) (241 )
Interest income 31
Interest expense   (5 )   (24 )
Income (loss) before income taxes (434 ) (265 )
Income tax benefit (expense)   104   69
Net income (loss) $ (330 ) $ (196 )
Net income (loss) per common share
Basic $ (0.03 ) $ (0.02 )
Diluted $ (0.03 ) $ (0.02 )
Weighted average shares outstanding
Basic   12,408   11,929
Diluted   12,408   11,929
Consolidated Balance Sheets (Unaudited)

(in thousands, except par value amounts)

March 31, December 31,
2019 2018


Current assets:
Cash and cash equivalents $ 6,608 $ 6,232
Accounts receivable, net 2,969 3,047
Inventories, net 7,280 7,817
Income taxes receivable 508 508
Prepaid expenses   425   546
Total current assets 17,790 18,150
Property and equipment, net 1,041 971
Deferred tax asset 338 234
Goodwill 1,521 1,521
Intangible assets, net 5,373 5,528
Operating lease right-of-use assets 2,764
Other assets   71   71
Total assets $ 28,898 $ 26,475

Liabilities and Shareholders’ Equity

Current liabilities:
Accounts payable $ 1,756 $ 1,800
Accrued expenses 578 593
Operating lease liabilities, current portion   913  
Total current liabilities 3,247 2,393
Operating lease liabilities, net of current   1,857  
Total liabilities   5,104   2,393
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 12,408 shares (2019) and 12,408 shares (2018)
1,241 1,241
Capital in excess of par 7,105 7,063
Retained earnings   15,448   15,778
Total shareholders’ equity   23,794   24,082
Total liabilities and shareholders’ equity $ 28,898 $ 26,475
Consolidated Statements of Cash Flows (Unaudited)

(in thousands)

Three Months Ended
March 31,
2019   2018
Cash flows from operating activities:
Net income (loss) $ (330 ) $ (196 )
Adjustments to reconcile net income to net cash provided (used) by
operating activities:
Depreciation and amortization 186 206
Stock-based compensation 42 60
Deferred income taxes (104 ) (69 )
Change in operating assets and liabilities:
Accounts receivable 78 206
Inventories 537 352
Prepaid expenses and other assets 121 (42 )
Accounts payable and accrued expenses   (53 )   (622 )
Total adjustments to net income (loss)   807   91
Net cash provided (used) by operating activities   477   (105 )
Cash flows from investing activities:
Purchase of property and equipment   (101 )  
Net cash used by investing activities   (101 )  
Cash flows from financing activities:
Repayments of long-term debt (200 )
Proceeds from exercise of stock options     88
Net cash used by financing activities     (112 )
Net increase (decrease) in cash and cash equivalents 376 (217 )
Cash and cash equivalents, beginning of period   6,232   4,114
Cash and cash equivalents, end of period $ 6,608 $ 3,897
Supplemental disclosures:
Cash paid during the period for interest $ 5 $ 18

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, 2018 and the Company’s
Quarterly Report on Form 10-Q for the quarter ended March 31, 2019 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.


Investor Relations:
Kevin Paprzycki, CFO

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