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): March 17, 2020
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.) |
| 4880 Havana Street, Suite 400, Denver, CO | 80239 | |
| --- | --- | |
| (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))
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. ☐
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 |
Item 2.02 Results of Operations and Financial Condition.
On March 17, 2020, Scott’s Liquid Gold-Inc. (the “Company”) issued a press release announcing its financial results for the quarter and year ended December 31, 2019. 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 March 17, 2020. |
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: | March 17, 2020 | By: | /s/ Kevin A. Paprzycki |
| Kevin A. Paprzycki | |||
| Chief Financial Officer |
slgd-ex991_6.htm
EXHIBIT 99.1
Corporate & financial news release
SCOTT’S LIQUID GOLD-INC. REPORTS 2019 RESULTS
2019 Highlights:
| • | Net sales of $28.5 million |
|---|---|
| • | Net loss of $0.7 million ($0.05 per share) |
| --- | --- |
| o | Includes $0.4 million in business development expenses and a $0.3 million impairment charge |
| --- | --- |
| • | Generated cash flow from operations of $0.7 million |
| --- | --- |
Fourth Quarter 2019 Highlights:
| • | Net sales of $8.1 million for the fourth quarter |
|---|---|
| • | Net income of $2,000 for the quarter |
| --- | --- |
| o | Included $0.4 million in business development expenses and a $0.3 million impairment charge |
| --- | --- |
DENVER, COLORADO – March 17, 2020 – Scott’s Liquid Gold-Inc. (OTC: SLGD) today announced operating results for the three months ended December 31, 2019, as well as the full 2019 year.
President and Chief Executive Officer Mark Goldstein stated, “Even though sales were soft versus year-ago, shipments of our Alpha Skin Care product to China helped to stabilize fourth quarter sales and margins. An asset impairment charge and expenses related to our manufacturing transition and Kids N Pets acquisition significantly contributed to our loss positions for Q4 and full year 2019.
While 2019 was a challenging year with respect to our China sales, we had significant accomplishments during the year. We reformulated and relaunched our key Alpha Skin Care products in response to Chinese FDA regulation. We managed to trim expenses to offset lower sales. Our team successfully integrated the acquisition of Kids N Pets brands. We also developed and launched two new products during 2019, our Denorex Daily hair care product and SLG One Clean Home, a multi-surface cleaner and polish. Finally, on March 10^th^, we closed on the sale of our manufacturing facility to strategically shift our operational platform. We have worked diligently to ensure a smooth transition to outsourced manufacturing over the course of 2020.
In the face of difficult circumstances this year, I am proud of the team’s response and how we have positioned the Company to drive shareholder value going forward.”
Net sales
Net sales for the three months ended December 31, 2019 decreased $1.0 million compared to the same period in 2018. This was primarily due to decreased distributed product sales as a result of slower overall facemask category sales and slower Batiste Dry Shampoo sales. These were partially offset by net sales associated with our October 1, 2019 Kids N Pets acquisition.
Net sales for the year ended December 31, 2019 decreased $8.6 million compared to 2018 primarily due to the impact of increased tariffs and Chinese regulatory changes on our Alpha Skin Care brand. We resumed our Alpha export shipments to China in late September after a four-month delay. Our sales decrease was also driven by decreased sales for our 7^th^ Heaven facemasks and Batiste Dry Shampoo. These decreases were partially offset by our Kids N Pets acquisition.
Net Loss
Net income for the three months ended December 31, 2019 was $2,000, compared to net income of $0.1 million for the three months ended December 31, 2018. The decrease was primarily attributable to a $0.3 million impairment charge related to held for sale property and equipment and acquisition-related and other business development expenses incurred during the fourth quarter of 2019. These were partially offset by income from our Kids N Pets acquisition.
Net loss for 2019 was $0.7 million, compared to net income of $2.2 million for 2018. The $2.9 million decrease was primarily attributable to decreased Alpha Skin Care sales due to Chinese tariff impacts and regulatory changes, our decrease in distributed product segment sales, a $0.3 million impairment charge, and acquisition-related and other business development expenses that we incurred during 2019. The decrease was partially offset by positive fourth quarter 2019 income from our Kids N Pets acquisition.
Cash Flow
Cash flow from operating activities was $0.7 million for 2019, as compared to $3.1 million for the same 2018 period. Much of the decrease in operating cash flow was attributable to a conscious effort to build inventory during the fourth quarter of 2019 in anticipation of our strategic shift to outsource manufacturing operations.
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, biodegradable, safe, nontoxic, stain and odor removing products targeted toward households with children and pets.
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 professionals and consumers alike and include brands such as Alpha^®^ Skin Care, Prell^®^, and Denorex^®^. Neoteric Cosmetics is also the proud American distributor of 7^th^ Heaven skin care products and the specialty channel distributor for Batiste Dry Shampoo.
SCOTT’S LIQUID GOLD-INC. & SUBSIDIARIES
Consolidated Statements of Operations
(in thousands, except per share data)
| Year Ended | ||||||
|---|---|---|---|---|---|---|
| December 31, | ||||||
| 2019 | 2018 | |||||
| Net sales | $ | 28,450 | $ | 37,058 | ||
| Cost of sales | 17,644 | 20,847 | ||||
| Gross Profit | 10,806 | 16,211 | ||||
| Operating expenses: | ||||||
| Advertising | 792 | 1,479 | ||||
| Selling | 5,903 | 7,357 | ||||
| General and administrative | 5,120 | 4,464 | ||||
| Impairment of property and equipment | 342 | - | ||||
| Total operating expenses | 12,157 | 13,300 | ||||
| Income (loss) from operations | (1,351 | ) | 2,911 | |||
| Interest income | 93 | 17 | ||||
| Interest expense | (22 | ) | (82 | ) | ||
| Gain on sale of equipment | 110 | - | ||||
| (Loss) Income before income taxes | (1,170 | ) | 2,846 | |||
| Income tax benefit (expense) | 513 | (619 | ) | |||
| Net (loss) income | $ | (657 | ) | $ | 2,227 | |
| Net (loss) income per common share | ||||||
| Basic | $ | (0.05 | ) | $ | 0.18 | |
| Diluted | $ | (0.05 | ) | $ | 0.18 | |
| Weighted average shares outstanding | ||||||
| Basic | 12,442 | 12,132 | ||||
| Diluted | 12,442 | 12,581 |
SCOTT’S LIQUID GOLD-INC. & SUBSIDIARIES
Consolidated Balance Sheets
(in thousands, except par value amounts)
| December 31, | |||
|---|---|---|---|
| 2018 | |||
| Assets | |||
| Current assets: | |||
| Cash and cash equivalents | 1,094 | $ | 6,232 |
| Accounts receivable, net | 2,695 | 3,047 | |
| Inventories, net | 7,841 | 7,817 | |
| Income taxes receivable | 705 | 508 | |
| Property and equipment held for sale | 500 | - | |
| Prepaid expenses | 368 | 546 | |
| Other current assets | 71 | 71 | |
| Total current assets | 13,274 | 18,221 | |
| Property and equipment, net | 124 | 971 | |
| Deferred tax asset | 556 | 234 | |
| Goodwill | 3,230 | 1,521 | |
| Intangible assets, net | 8,719 | 5,528 | |
| Operating lease right-of-use assets | 188 | - | |
| Total assets | 26,091 | $ | 26,475 |
| Liabilities and Shareholders’ Equity | |||
| Current liabilities: | |||
| Accounts payable | 1,809 | $ | 1,800 |
| Accrued expenses | 422 | 593 | |
| Operating lease liabilities, current portion | 197 | - | |
| Total current liabilities | 2,428 | 2,393 | |
| Operating lease liabilities, net of current | 19 | - | |
| Other liabilities | 27 | - | |
| Total liabilities | 2,474 | 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 12,462 shares (2019) and 12,408 shares (2018) | 1,246 | 1,241 | |
| Capital in excess of par | 7,250 | 7,063 | |
| Retained earnings | 15,121 | 15,778 | |
| Total shareholders’ equity | 23,617 | 24,082 | |
| Total liabilities and shareholders’ equity | 26,091 | $ | 26,475 |
All values are in US Dollars.
SCOTT’S LIQUID GOLD-INC. & SUBSIDIARIES
Consolidated Statements of Cash Flows
(in thousands)
| Year Ended | ||||||
|---|---|---|---|---|---|---|
| December 31, | ||||||
| 2019 | 2018 | |||||
| Cash flows from operating activities: | ||||||
| Net (loss) income | $ | (657 | ) | $ | 2,227 | |
| Adjustments to reconcile net (loss) income to net cash provided by operating activities: | ||||||
| Depreciation and amortization | 796 | 818 | ||||
| Stock-based compensation | 149 | 227 | ||||
| Deferred income taxes | (322 | ) | 150 | |||
| Gain on sale of equipment | (110 | ) | - | |||
| Impairment of property and equipment | 342 | - | ||||
| Change in operating assets and liabilities: | ||||||
| Accounts receivable | 352 | 57 | ||||
| Inventories | 282 | 970 | ||||
| Prepaid expenses and other assets | 178 | (283 | ) | |||
| Income taxes receivable | (197 | ) | (874 | ) | ||
| Accounts payable and accrued expenses | (134 | ) | (199 | ) | ||
| Total adjustments to net (loss) income | 1,336 | 866 | ||||
| Net cash provided by operating activities | 679 | 3,093 | ||||
| Cash flows from investing activities: | ||||||
| Purchase of internal-use software | (286 | ) | - | |||
| Acquisition | (5,583 | ) | - | |||
| Purchase of property and equipment | (101 | ) | (222 | ) | ||
| Proceeds from sale of equipment | 110 | - | ||||
| Net cash used in investing activities | (5,860 | ) | (222 | ) | ||
| Cash flows from financing activities: | ||||||
| Repayments of long-term debt | - | (1,200 | ) | |||
| Proceeds from revolving credit facility | 4,000 | - | ||||
| Repayments of revolving credit facility | (4,000 | ) | - | |||
| Proceeds from exercise of stock options | 43 | 447 | ||||
| Net cash provided by (used in) financing activities | 43 | (753 | ) | |||
| Net (decrease) increase in cash and cash equivalents | (5,138 | ) | 2,118 | |||
| Cash and cash equivalents, beginning of period | 6,232 | 4,114 | ||||
| Cash and cash equivalents, end of period | $ | 1,094 | $ | 6,232 | ||
| Supplemental disclosures: | ||||||
| Cash paid during the period for interest | $ | 22 | $ | 44 | ||
| Cash paid during the period for income taxes | $ | - | $ | 1,342 |
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, 2019 and the Company's subsequent Quarterly Reports on Form 10-Q and other 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, CFO
303.576.6032