Wednesday, February 26th, 2020
Mace Security International, Inc.
4400 Carnegie
Cleveland, OH 44103

Mace Earnings Release for Q4 and Full Year ended December 31, 2019

Mace Reports Fourth Quarter and Full Year 2019 Financial Results

 

• Net loss of ($77,000) for the quarter improved from ($161,000) in the third quarter of 2019 and ($1,859,000) in the fourth quarter of 2018

 

• Gross profit for the fourth quarter of 2019 increased $273,000 or 42% over same period in 2018

 

• EBITDA of $45,000 and adjusted EBIDTA of $61,000 for the fourth quarter of 2019 represents the third straight quarter of sequential EBIDTA and Adjusted EBIDTA improvement

 

• Year ended December 31, 2019 net sales reported of $10,504,000 compared to $11,489,000 in the same period of 2018, with 2019 net loss of ($1,700,000) improving from loss of ($1,946,000) for the year ended December 31, 2018.

 

CLEVELAND, Ohio – Mace Security International Inc. (OTCQX: MACE) today released unaudited financial results for the quarter ended December 31, 2019 and audited results for the twelve months ended December 31, 2019.

The Company’s net sales for the fourth quarter ended December 31, 2019 decreased $459,000 or 16% over the same period in 2018, with a net loss in the fourth quarter of ($77,000). EBIDTA for the fourth quarter of 2019 improved to $45,000 compared to ($1,749,000) in the same period of 2018. Adjusted EBIDTA was $61,000 for the quarter ended December 31, 2019 compared to ($223,000) in the same period of the prior year.

For the year ended December 31, 2019 net sales declined to $10,504,000 from $11,489,000 in the prior year, while net loss for the twelve-month period ended December 31, 2019 declined to ($1,700,000) from ($1,946,000) in the same period of 2018. EBIDTA and Adjusted EBIDTA for the year ended December 31, 2019 were ($1,207,000) and ($158,000), versus ($1,523,000) and $172,000, respectively, for the year ended December 31, 2018.

President and CEO Gary Medved commented: “As a result of our relentless focus on financial and operating performance improvement, we have reached the point where these improvements are now taking hold. Each of the quarters in 2019 resulted in increased EBIDTA levels from the preceding period. We have lowered our cost structure so that SG&A expenses are now down to 36% of net sales, from 46% in the three months ended December 31, 2018, and approximately half of SG&A run rate of 67% of net sales that existed when we came on board in the first quarter of 2019.”

“Furthermore, our customers are beginning to react to our refreshed products and packaging. We have added new customers in Q4, as well as incremental product placements that together we expect to contribute to a top line sale increase late Q1 or early Q2 of 2020.”

Fourth Quarter/Full Year 2019 Financial Highlights

• EBIDTA increased sequentially from ($736,000) in Q1 2019 to ($481,000) in Q2, ($36,000) in Q3, and $45,000 in Q4. Adjusted EBIDTA for the same periods within 2019 was ($223,000) in Q1, ($5,000) in Q2, $9,000 in Q3, and $61,000 in Q4 2019.

• Despite a ($459,000) decline in fourth quarter 2019 sales, compared to the same period in 2018, gross profit increased $273,000.

• SG&A expenses for the fourth quarter 2019 decreased to 36% of net sales compared to full year 2018 average of 41% of net sales and 41% in the third quarter of 2019.

Fourth Quarter/Full Year 2019 Operational Highlights

• As a result of the Company’s decreased manufacturing costs from consolidation of positions and other actions throughout the latter half of 2019, manufacturing variances, a measure of the efficiency, declined from approximately $90,000 per month in the first half of 2019 to less than $57,000 per month in the third and fourth quarter of 2019, while keeping production capacity unchanged. The Company also has also signed outsourcing arrangements with IT and logistics service providers that have the potential to continue to reduce overall SG&A costs while maintaining the existing level of support to our customers.

• In the fourth quarter, the Company obtained new business commitments from several significant national retailers. These commitments include several new customers in the automotive space, as well as product line expansions at several existing national retail customers. While some of these products began shipping late in the fourth quarter of 2019, the Company believes most of the net sales impact will begin to occur in mid to late first quarter of 2020 and has the potential to add in excess of 5% annual incremental net sales.

Conference Call

Mace® will conduct a conference call on Thursday February 27, 2020 at 11 AM Eastern, 8 AM Pacific time to discuss its financial and operational performance for the quarter and for the twelve months ended December 31, 2019.
Participant Toll-Free Dial-In Number: (877) 719-8065; Conference ID 4919426

A full set of the consolidated financial statements 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 time period that the recording will be available is listed below. To access the recording, use the dial-in number listed below and the conference ID 4919426.

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 4/22/2020.

 

About Mace Security International, Inc.

Mace Security International Inc. is a globally recognized leader in personal safety and security 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 Companies other leading brands include Tornado® Brand stun guns and pepper spray, and Vigilant® Brand 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.     
        Condensed Consolidated Balance Sheets    
      (Amounts in thousands)  
      (Audited)   (Audited)  
ASSETS    December 31, 2019     December 31, 2018 
Current assets:
Cash and cash equivalents  $            307  $            198
Short term investments                       –                 253
Accounts receivable                2,080             2,085
Allowance for doubtful accounts                                           (536)               (130)
Inventories                1,591             1,932
Note receivable and other current assets                   446                 642
Total current assets                3,888             4,980
Property and equipment, Net                   562                 691
Operating lease right-of-use asset, net                   752                    –
Finance lease right-of-use asset, net                      11                    –
Goodwill                1,031                 877
Intangible assets, net                2,744             2,943
Note receivable and other non-current assets                      14  

                 18

Total assets  $        9,002           9,509
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt  $             815  $            472
 Operating and finance lease obligations – current                   212                    –
Accounts payable                   364                 443
Income taxes payable                      56                   55
 Accrued expenses and other current liabilities                 412                 399
Total current liabilities                1,859             1,369
Long-term debt                   284                 481
Operating and finance  lease obligations – non-current                   573                    –
Total liabilities                2,716             1,850
Stockholders’ equity:
Common stock issued and outstanding                   633                 631
Additional paid in capital            103,252         102,927
Treasury stock                    (22)                                           (22)
Accumulated deficit            (97,577)          (95,877)
Total stockholders’ equity             6,286

           7,659

Total liabilities and stockholders’ equity  $        9,002  $        9,509

 

 

 

 

 

  Mace Security International, Inc.     
          Condensed Consolidated Statements of Operations    
          Three Months Ended December 31    
          (Unaudited)    
          (Amounts in thousands)    
               
        2019   2018 
Net sales  $        2,377  $         2,836
Cost of goods sold           1,449            2,181
Gross profit              928               655
Total depreciation                39                 48
Selling, general and administrative expenses              848            1,307
Operating income (loss)                41              (700)
Interest expense               (11)                (10)
Interest income                                18
 Interest income (expense), net               (11)                   8
(Loss) on sale of short-term investments                –                 (4)
Amortization               (69)                (67)
Other (expense), net               (35)           (1,094)
(Loss) before income taxes               (74)           (1,857)
Income tax expense                  3                   2
Net (Loss)  $           (77)  $      (1,859)

 

 

 

 

 

Mace Security International, Inc. 

 

 

 

 

 

 

 

Condensed Consolidated Statements of Operations

Twelve Months Ended December 31

 

 

 

 

 

 

 

(Audited)

 

 

 

 

 

 

 

(Amounts in thousands)

   
               
        2019   2018 
Net sales  $     10,504  $       11,489
Cost of goods sold           6,579            7,133
Gross profit           3,925            4,356
Total depreciation              163               195
Selling, general and administrative expenses           5,057            4,754
Operating (loss)                             (1,295)              (593)
Interest expense               (57)                (43)
Interest income                  4                 85
 Interest income (expense), net               (53)                 42
Gain (loss) on sale of short-term investments                (1)                   1
Amortization                                 (274)                                   (268)
Other (expense)               (74)           (1,126)
Loss before income taxes          (1,697)           (1,944)
Income tax expense                  3                   2
Net loss  $    ( 1,700)  $      (1,946)

 

 

 

 

 

 

 

Mace Security International, Inc. 
        EBIDTA and Adjusted EBIDTA 
    Three Months Ended December 31
    (Unaudited)
    (Amounts in thousands)
      2019   2018
Net income (loss)  $             (77)  $        (1,859)
Adjustments:
Interest expense                    11                     10
Interest income                     –                  (18)
Depreciation and Amortization                  108                   115
Income tax expense                      3                       2
EBITDA                    45             (1,750)
Impairment of Security Partners note                     –                   706
Impairment of SecureCheck note                    18                   358
Excess and Obsolete inventory write down                     –                   371
Other non-cash write-downs                      7                     30
Washington Labs final working capital adj.                     –                     25
Stock Based compensation                      9                     36
Adjusted EBITDA  $               79  $           (224)

 

 

 

 

 

 

 

Mace Security International, Inc. 
        EBIDTA and Adjusted EBIDTA Reconciliation    
    Year Ended December 31
    (Unaudited)
    (Amounts in thousands)
      2019   2018
Net loss  $     (1,700)  $       (1,946)
Adjustments:
Interest expense                57                 43
Interest income                (4)                (85)
Income tax expense                  3                   2
Depreciation and Amortization              437               463
EBITDA          (1,207)           (1,523)
Impairment of Security Partners note                –               706
Impairment of SecureCheck note                18               358
Excess and Obsolete inventory write down                –               371
Other non-cash write-downs                14                 79
Washington Labs final working capital adj.                –                 25
Stock Based compensation              259               156
Severance              299                 –
Inventory write-off on exit of munitions business              155                 –
Impairment of Stealth Technology/MDM  A/R              322                 –
Adjusted EBITDA  $         (140)  $           172

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 nonGAAP 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, gmedved@mace.com

                  Mark Barrus SVP and Chief Financial Officer, mbarrus@mace.com