8-K
Horizon Kinetics Holding Corp (HKHC)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 13, 2021
SCOTT’S LIQUID GOLD-INC.
(Exact name of Registrant as specified in its charter)
| Colorado | 001-13458 | 84-0920811 |
|---|---|---|
| (State or other jurisdiction<br><br><br>of incorporation) | (Commission File Number) | (I.R.S. Employer<br><br><br>Identification No.) |
| 8400 E. Crescent Parkway, Suite 450, Greenwood Village, CO | 80111 | |
| --- | --- | |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: (303) 373-4860
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Exchange Act.
| Title of each class | Trading Symbol | Name of exchange on which registered |
|---|---|---|
| None | None | None |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition.
On August 13, 2021, Scott’s Liquid Gold-Inc. (the “Company”) issued a press release announcing its financial results for the quarter ended June 30, 2021. This press release is furnished herewith as Exhibit 99.1 pursuant to this Item 2.02.
The information contained in this Item 2.02, including Exhibit 99.1 attached hereto, is being furnished and shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section. Additionally, the information contained in this Item 2.02 or Exhibit 99.1 shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Item 9.01Financial Statements and Exhibits.
(d)Exhibits: The following exhibits are filed as part of this report:
| Exhibit No. | Description |
|---|---|
| 99.1 | Scott’s Liquid Gold-Inc. press release, dated August 13, 2021. |
| 104 | Cover Page Interactive Data File |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| SCOTT’S LIQUID GOLD-INC. | |||
|---|---|---|---|
| Date: | August 13, 2021 | By: | /s/ Kevin A. Paprzycki |
| Kevin A. Paprzycki | |||
| Co-President and Chief Financial Officer |
slgd-ex991_6.htm
Exhibit 99.1
Corporate & financial news release
SCOTT’S LIQUID GOLD-INC. REPORTS SECOND QUARTER RESULTS
Second Quarter 2021 Results:
| • | Net sales of $8.4 million vs. $6.1 million in 2020 |
|---|---|
| • | Net loss of $1.1 million (($0.08) per share) driven by restructuring costs of $0.8 million and COVID-related supply chain impacts |
| --- | --- |
| • | Net cash used in operating activities of $1.0 million vs. net cash from operating activities of $5.1 million in 2020 |
| --- | --- |
GREENWOOD VILLAGE, COLORADO – August 13, 2021 – 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)
| December 31, | |||
|---|---|---|---|
| 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 |
All values are in US Dollars.
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.
Investor Relations Contact:
Kevin Paprzycki
Interim Co-President & CFO
303.576.6032