Mace Security International Reports Second Quarter 2020 Financial Results

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  • 2Q 2020 net sales totaled $3,400,000, up $465,000 or 16% versus prior year, primarily driven by organic growth, addition of new customers and new product line extensions
  • Net income for the quarter was $453,000 or 13.1% of net sales, an increase of $1,100,000, compared to a net loss of ($606,000) in the same period of 2019
  • EBITDA for the quarter was $596,000 or 17% of net sales, an increase of $1,100,000 versus ($481,000) EBIDTA in the second quarter of 2019
  • YTD EBITDA is $836,000 or 13% of net sales versus ($1,200,000) in 2019 for the same time frame.

CLEVELAND, OH / ACCESSWIRE / July 31, 2020 / Mace Security International (OTCQX:MACE) today announced second quarter 2020 financial results for the quarter ended June 30, 2020.

The Company’s net sales for the second quarter were $3,400,000, up 16% versus prior year. The increase reflects organic growth across our retail and e-commerce channels, addition of new customers across core channel segments as well as product line extensions at existing retailers. Net sales across the consumer and e-commerce channels were up $867,000 even when offset by decreases in Sporting Goods and International channels of $239,000 due to store closures and product availability related to COVID-19.

The Company reported a gross margin rate for the quarter of 41%, up 1000 bp from the same time last year. SG&A expenses were $841,000 or 25% of net sales, compared with $1,400,000 or 48% in 2Q 2019, reflecting non-recurring charges last year. Working capital turns were 4.7 on an annualized basis.

President and CEO Gary Medved commented: “Our business exhibited increasing strength as the quarter progressed despite a few challenges created by COVID-19. The company’s renewed focus on Mace® Brand, product lineup, and digital awareness allowed us to capitalize on the accelerated shift to consumer personal safety products, as well as online spending brought on by the pandemic. Between our branded website and online marketplaces, total digital sales increased triple digits on a percentage basis in the second quarter driven by existing customers and a dramatic increase in new customer acquisition.”

“The pace accelerated as the quarter progressed. Meanwhile, the strong relationships we have forged with our key retail partners helped us weather a severe slowdown in April and early May due to reduced traffic and store closures. The country’s lockdown restrictions began to ease midway through the second quarter, when we experienced a significant pick up in weekly sell-through at retail. Given the circumstances, we are pleased with our recent performance and encouraged as this momentum has carried into July and future months. Orders across retail and digital segments have increased in the past two months at a triple-digit percentage rate over the same period in 2019. Though uncertainty remains about the ultimate impact COVID-19 will have on the personal safety products industry, I am confident that our newly refined business model and strengthening balance sheet have Mace® Brand well positioned going forward.”

Sanjay Singh, Executive Chairman, commented: “We raised the bar within the company on self-accountability and meeting commitments to our employees, customers and stakeholders. The entire team stepped up, from customer service to those who ship the products amidst challenging supply chain issues and a burgeoning backlog.”

“Orders in April were the lowest the company has seen in a very long time but bounced back as businesses opened up in mid-May. The results of our awareness campaign also drove meaningful digital sales. The company is on a solid footing now as we focus our efforts on executing all the initiatives that were launched this year. Balance sheet strength and operations excellence continue to be our areas of focus. I am very proud and inspired by our team’s ability to rise to the occasion. The focus on continuous improvement company-wide will continue in 3Q as we continue to ship a sizeable backlog. Gary and his team did a tremendous job this quarter.”

Second Quarter 2020 Financial Highlights

  • Net sales increased $465,000 or 16% versus prior year, primarily driven by organic growth, addition of new customers both in retail and e-commerce segments and new product line extensions at retailers
  • Gross profit for the second quarter increased by $473,000 or 51% over the same period in the prior year, driven primarily by increased sales volume, labor efficiencies, and a non-recurring inventory provision that occurred last year
  • SG&A expenses declined by $578,000 to $841,000 for the quarter, or 25% of net sales, driven primarily by lower spending in salaries and benefits, reduced legal and outside marketing services, and a non-recurring impairment of receivables expense that occurred in the second quarter of 2019
  • Net income increased by$1,100,000
  • Cash and cash equivalents increased to $1,600,000 as of June 30, 2020, an increase of $1,300,000 over the $307,000 on hand on December 31, 2019. During the second quarter of 2020, the Company received $619,000 from our lender as part of the PPP stimulus.
  • Adjusted EBITDA for the quarter was $655,000 (1 cent per share)

Second Quarter 2020 Operational Highlights

  • The Company maintained full manufacturing and distribution activities throughout the quarter, and to date has experienced some supply chain disruptions due to the COVID-19 emergency. Labor efficiencies have improved over last year during the same time last year.

YTD 2020 Operational Highlights

  • Net Sales increased by $544,000 or 9.6% versus the same period last year driven by organic growth, product line extensions in the second quarter and sales to new customers
  • Gross Profits increased by $514,000 or 26% when compared to the same period last year mostly due to increases in labor efficiencies and the impact of one-time costs that occurred last year
  • SG&A decreased by $1,500,000 or 47% mostly from one-time costs that occurred last year and from cost controls and lower wages
  • Net Income was $573,000 or 9% of net sales versus a loss of $1,500,000 last year

Conference Call

Mace® will conduct a conference call on Tuesday August 4th, 2020 at 11 AM EDT, 8 AM PDT to discuss its financial and operational performance for the quarter.

Participant Toll-Free Dial-In Number: (833) 360-0862; Conference ID 9602639

A full set of the consolidated financial statements and accompanying slide presentation are available on www.Mace.com. A digital recording of the conference call will be available for replay two hours after the call’s completion. The date ranges the recording will be available are listed below. To access the recording, use the dial-in number listed below and the conference ID 9602639

Encore dial-in number: 855-859-2056 (or internationally on 404-537-3406)

Encore dates: Will be available 2 hours after the call and will expire midnight on October 3, 2020

About Mace Security International, Inc.

Mace Security International Inc. is a globally recognized leader in personal safety products. Based in Cleveland, Ohio, the Company has spent more than 30 years designing and manufacturing consumer and tactical products for personal defense and security under its world-renowned Mace® Brand – the original trusted brand of pepper spray products. The Company’s other leading brands include Tornado® Brand stun guns and pepper spray, and Vigilant® Brand personal alarms. The Company also offers aerosol defense sprays for law enforcement and security professionals worldwide through its Take Down® Brand.

Mace Security International distributes and supports its products and services through mass-market retailers, wholesale distributors, independent dealers, e-commerce channels and through its website, www.Mace.com. For more information, please visit www.mace.com.

Forward-Looking Statements

Certain statements and information included in this press release constitute “forward-looking statements” within the meaning of the Federal Private Securities Litigation Reform Act of 1995. When used in this press release, the words or phrases “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimate,” “projected,” “intend to” or similar expressions are intended to identify “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to certain risks, known and unknown, and uncertainties, including but not limited to economic conditions, dependence on management, our ability to compete with competitors, dilution to shareholders, and limited capital resources.

Mace Security International, Inc. and Subsidiaries CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (Amounts in thousands)






Three Months Ended June 30,
2020 2019

Net sales

$ 3,432 $ 2,967

Cost of goods sold

2,032 2,040

Gross profit

1,400 927

Selling, general, and administrative expenses

841 1,419

Amortization of intangible assets

96 67

Loss on disposal of property and equipment

29

Operating income (loss)

463 (588 )

Interest expense

(10) (17 )

Other expense, net

(1 )

Income (loss) before income tax provision

453 (606 )

Income tax provision

Net income (loss)

$ 453 $ (606 )

Mace Security International, Inc. and Subsidiaries CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (Amounts in thousands)







Six Months Ended June 30,
2020 2019

Net sales

$ 6,223 $ 5,679

Cost of goods sold

3,742 3,712

Gross profit

2,481 1,967

Selling, general, and administrative expenses

1,721 3,237

Amortization of intangible assets

165 134

Loss on disposal of property and equipment

29

Operating income (loss)

595 (1,433 )

Interest expense

(22) (31 )

Interest income

4

Loss on short-term investments

(1 )

Other expense, net

(1 )

Income (loss) before income tax provision

573 (1,462 )

Income tax provision

Net income (loss)

$ 573 $ (1,462 )

Mace Security International, Inc. and Subsidiaries CONSOLIDATED BALANCE SHEETS (Amounts in thousands, except share and per share information)


ASSETS

June 30, 2020 December 31, 2019
(Unaudited)

Current assets:

Cash

$ 1,620 $ 307

Accounts receivable, less allowance for doubtful accounts of $535 and

$536 at June 30, 2020 and December 31, 2019, respectively

2,246 1,544

Inventories

1,672 1,591

Notes receivable, net of allowance, and other current assets

276 446

Total current assets

5,814 3,888

Property and equipment:

Buildings and leasehold improvements

255 245

Machinery and equipment

2,017 2,003

Furniture and fixtures

110 110

Total property and equipment

2,382 2,358

Accumulated depreciation and amortization

(1,873) (1,796 )

Total property and equipment, net

509 562

Operating lease – right-of-use asset, net of amortization

647 752

Finance lease – right-of-use asset, net of amortization

30 11

Goodwill

1,031 1,031

Intangible assets, net

2,579 2,744

Notes receivable, net of allowance, and other non-current assets

14 14

Total other assets

4,301 4,552

Total assets

$ 10,624 $ 9,002



LIABILITIES AND STOCKHOLDERS’ EQUITY

June 30, 2020 December 31, 2019
(Unaudited)

Current liabilities:

Current portion of long-term debt

$ 220 $ 215

Bank line of credit

600 600

Current operating lease obligation

211 209

Current finance lease obligation

6 3

Accounts payable

904 364

Income taxes payable

55 56

Accrued expenses and other current liabilities

364 412

Total current liabilities

2,360 1,859

Long-term debt, net of current portion

173 284

Payroll Protection Program Loan, non-current

619

Non-current operating lease obligations

455 565

Non-current finance lease obligations

25 8

Total liabilities

3,632 2,716

Stockholders’ equity:

Preferred stock, $.01 par value; authorized 10,000,000 shares, no shares

issued and outstanding at June 30, 2020 and December 31, 2019

Common stock, $.01 par value; authorized 100,000,000 shares,

issued and outstanding shares of 63,954,003 and 63,319,834, at June 30,

2020 and December 31, 2019, respectively

639 633

Additional paid-in capital

103,379 103,252

Accumulated deficit

(97,004) (97,577 )
7,014 6,308

Less treasury stock at cost, 90,548 shares at both June30, 2020

and December 31, 2019

(22) (22 )

Total stockholders’ equity

6,992 6,286

Total liabilities and stockholders’ equity

$ 10,624 $ 9,002

Mace Security International, Inc. and Subsidiaries RECONCILIATION OF NET INCOME TO EBITDA AND ADJUSTED EBITDA (Unaudited) (Amounts in thousands)



Three Months Ended June 30,
2020 2019

Net income (loss)

$ 453 $ (606 )

Adjustments:

Interest expense

10 17

Interest income

Income tax expense

Depreciation and amortization

133 108

EBITDA

596 (481)

Severance

12

Non-cash stock compensation expense

47 6

Adjusted EBITDA

$ 655 $ (475 )

Mace Security International, Inc. and Subsidiaries RECONCILIATION OF NET INCOME TO EBITDA AND ADJUSTED EBITDA (Unaudited) (Amounts in thousands)




Six Months Ended June 30,
2020 2019

Net income (loss)

$ 573 $ (1,462 )

Adjustments:

Interest expense

22 31

Interest income

(4 )

Income tax expense

Depreciation and amortization

241 218

EBITDA

836 (481)

Severance

Non-cash stock compensation expense

77 242

Adjusted EBITDA

$ 913 $ (239 )

In this press release, the Company’s financial results and financial guidance are provided in accordance with accounting principles generally accepted in the United States (GAAP) and using certain non-GAAP financial measures. Management believes that presentation of operating results using non-GAAP financial measures provides useful supplemental information to investors and facilitates the analysis of the Company’s core operating results and comparison of operating results across reporting periods. Management also uses non-GAAP financial measures to establish budgets and to manage the Company’s business. A reconciliation of the GAAP financial results to non-GAAP financial results is included in the attached schedules.

Contacts:

Gary Medved

President and Chief Executive Officer

SOURCE: MACE SECURITY INTERNATIONAL INC

View source version on accesswire.com:

https://www.accesswire.com/599731/Mace-Security-International-Reports-Second-Quarter-2020-Financial-Results

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