Mace Reports Third Quarter 2019 Financial Results

Net sales for the third quarter of 2019 decreased to $2,447,000 or (29%) over same period in 2018
Net loss of ($161,000) for the quarter, which includes charges for $14,000 for severance expenses and final charges for exit of the munitions business of $15,000
Adjusted EBITDA of $9,000 for the quarter

CLEVELAND, OH / ACCESSWIRE / October 30, 2019 / Mace Security International Inc. (OTCQX:MACE) today released unaudited financial results for the quarter ended September 30, 2019.

The Company's net sales for the third quarter decreased 29% over the same period in 2018, with net loss of ($161,000). EBIDTA for the third quarter of 2019 of was a loss of ($36,000), and adjusted EBIDTA was $9,000.

President and CEO Gary Medved commented: "We believe the Company is nearing completion of it's resetting of operational and financial performance that began in Q1 of this year. We are pleased that our EBIDTA and adjusted EBIDTA were close to breakeven despite a reduced level of sales, which provides a foundation for future EBIDTA and profitability growth in 2020."

Third Quarter/Year to Date 2019 Financial Highlights

Net sales decreased (29%) to $2,447,000 for the three months ended September 30, 2019 compared to $3,447,000 in the same period last year, and decreased (6%) to $8,126,000 for the nine months ended September 30, 2019 compared to $8,653,000 in the same period in 2018.
Gross margin percentage for the third quarter declined from 43% to 40%, while year to date gross margin percentage declined from 43% to 37% from the same period in 2018. The year to date gross margin decline includes the impact of ($124,000) for exit of the less lethal munitions business announced in Q2 (the last $15,000 of exit cost is in SG&A costs in the third quarter.)
SG&A expenses for the three months ended September 30, 2019 declined by ($153,000) vs. the same period from 2018.

Third Quarter 2019 Operational Highlights

The Company decreased manufacturing overhead costs by an annual rate of over $200,000 from consolidation of positions at the end of Q3, while keeping production capacity unchanged. The full impact of this overhead reduction is expected to be achieved in Q4 of 2019.
The Company is continuing to develop packaging with a smaller footprint which is less expensive and environmentally friendlier. In addition the Company is continuing the refresh of its products in more contemporary and vibrant colors. The combined impact of packaging, logo design, and new product colors offers retail customers greater choice and flexibility in product placement as they finalize their upcoming 2020 product lineups.

Conference Call

Mace® will conduct a conference call on Thursday October 31, 2019 at 1 PM EDT, 10 AM PDT to discuss its financial and operational performance for the quarter.

Participant Toll-Free Dial-In Number: (877) 719-8065; Conference ID 8266357

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 8266357.

Encore dial-in number: 800-585-8367 or 855-859-2056 (or internationally on 404-537-3406)
Encore dates: Will be available 2 hours after the call and will expire at 23:59 on 05 Nov 2019 .

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 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)

 
(Unaudited)
 
 
(Audited)
 

ASSETS

 
September 30, 2019
 
 
December 31, 2018
 

Current assets:

Cash and cash equivalents

 
$ 
386
 
 
$ 
198
 

Short term investments

 
 
–
 
 
 
253
 

Accounts receivable

 
 
1,823
 
 
 
2,085
 

Allowance for doubtful accounts

 
 
(523
)
 
 
(130
)

Inventories

 
 
1,569
 
 
 
1,932
 

Note receivable and other current assets

 
 
526
 
 
 
642
 

Total current assets

 
 
3,781
 
 
 
4,980
 

Property and equipment, Net

 
 
607
 
 
 
691
 

Operating lease right-of-use asset, net

 
 
802
 
 
 
–
 

Finance lease right-of-use asset, net

 
 
12
 
 
 
–
 

Goodwill

 
 
1,031
 
 
 
877
 

Intangible assets, net

 
 
2,812
 
 
 
2,943
 

Note receivable and other non-current assets

 
 
14
 
 
 
18
 

Total assets

 
$ 
9,059
 
 
$ 
9,509
 

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Current portion of long-term debt

 
$ 
762
 
 
$ 
472
 

Operating and finance lease obligations – current

 
 
210
 
 
 
–
 

Accounts payable

 
 
266
 
 
 
443
 

Income taxes payable

 
 
53
 
 
 
55
 

Accrued expenses and other current liabilities

 
 
469
 
 
 
399
 

Total current liabilities

 
 
1,760
 
 
 
1,369
 

Long-term debt

 
 
339
 
 
 
481
 

Operating and finance lease obligations – non-current

 
 
626
 
 
 
–
 

Total liabilities

 
 
2,725
 
 
 
1,850
 

Stockholders' equity:

Common stock issued and outstanding

 
 
633
 
 
 
631
 

Additional paid in capital

 
 
103,223
 
 
 
102,927
 

Treasury stock

 
 
(22
)
 
 
(22
 

Accumulated deficit

 
 
(97,500
)
 
 
(95,877
 

Total stockholders' equity

 
 
6,334
 
 
 
7,659
 

Total liabilities and stockholders' equity

 
$ 
9,059
 
 
$ 
9,509
 

Mace Security International, Inc.
Condensed Consolidated Statements of Operations
Three Months Ended September 30
(Unaudited)
(Amounts in thousands)

 
2019
 
 
2018
 

Net sales

 
$ 
2,447
 
 
$ 
3,447
 

Cost of goods sold

 
 
1,478
 
 
 
1,949
 

Gross profit

 
 
969
 
 
 
1,498
 

Total depreciation

 
 
40
 
 
 
50
 

Selling, general and administrative expenses

 
 
996
 
 
 
1,149
 

Operating income (loss)

 
 
(67
)
 
 
299
 

Interest expense

 
 
(14
)
 
 
(5
)

Interest income

 
 
–
 
 
 
17
 

Interest income (expense), net

 
 
(14
)
 
 
12
 

(Loss) on sale of short-term investments

 
 
–
 
 
 
(6
)

Amortization

 
 
(71
)
 
 
(67
)

Other (expense)

 
 
(9
)
 
 
(32
)

Income (Loss) before income taxes

 
 
(161
)
 
 
206
 

Income tax expense

 
 
–
 
 
 
–
 

Net Income (loss)

 
$ 
(161
)
 
$ 
206
 

Mace Security International, Inc.
Condensed Consolidated Statements of Operations
Nine Months Ended September 30
(Unaudited)
(Amounts in thousands)

 
2019
 
 
2018
 

Net sales

 
$ 
8,126
 
 
$ 
8,653
 

Cost of goods sold

 
 
5,130
 
 
 
4,952
 

Gross profit

 
 
2,996
 
 
 
3,701
 

Total depreciation

 
 
124
 
 
 
147
 

Selling, general and administrative expenses

 
 
4,209
 
 
 
3,447
 

Operating income (loss)

 
 
(1,337
)
 
 
107
 

Interest expense

 
 
(46
)
 
 
(33
)

Interest income

 
 
4
 
 
 
67
 

Interest income (expense), net

 
 
(42
)
 
 
34
 

Gain (loss) on sale of short-term investments

 
 
(1
)
 
 
5
 

Amortization

 
 
(205
)
 
 
(201
)

Other (expense)

 
 
(38
)
 
 
(32
)

Loss before income taxes

 
 
(1,623
)
 
 
(87
)

Income tax expense

 
 
–
 
 
 
–
 

Net loss

 
$ 
(1,623
)
 
$ 
(87
)

Mace Security International, Inc.
EBIDTA and Adjusted EBIDTA reconciliation
Three Months Ended September 30
(Unaudited)
(Amounts in thousands)

 
2019
 
 
2018
 

Net income (loss)

 
$ 
(161
)
 
$ 
206
 

Adjustments:

Interest expense

 
 
14
 
 
 
5
 

Interest income

 
 
–
 
 
 
(17
)

Depreciation and Amortization

 
 
111
 
 
 
117
 

Income tax expense

 
 
–
 
 
 
–
 

EBITDA

 
 
(36
)
 
 
311
 

Severance

 
 
14
 
 
 
16
 

Non-Cash Stock Compensation Expense

 
 
9
 
 
 
38
 

Impairment of customer receivable

 
 
–
 
 
 
–
 

Non-lethal munitions product line exit

 
 
15
 
 
 
–
 

Deposit forfeiture/asset disposal

 
 
7
 
 
 
–
 

Adjusted EBITDA

 
$ 
9
 
 
$ 
365
 

Mace Security International, Inc.
EBIDTA and Adjusted EBIDTA Reconciliation
Nine Months Ended September 30
(Unaudited)
(Amounts in thousands)

 
2019
 
 
2018
 

Net loss

 
$ 
(1,623
)
 
$ 
(87
)

Adjustments:

Interest expense

 
 
46
 
 
 
33
 

Interest income

 
 
(4
)
 
 
(67
)

Income tax expense

 
 
–
 
 
 
–
 

Depreciation and Amortization

 
 
329
 
 
 
348
 

EBITDA

 
 
(1,252
)
 
 
227
 

Severance

 
 
314
 
 
 
–
 

Non-Cash Stock Compensation Expense

 
 
251
 
 
 
120
 

Impairment of customer receivable

 
 
332
 
 
 
–
 

Non-lethal munition product line exit

 
 
160
 
 
 
–
 

Deposit forfeiture/asset disposal

 
 
42
 
 
 
–
 

Adjusted EBITDA

 
$ 
(153
)
 
$ 
347
 

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
gmedved@mace.com

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

SOURCE: MACE SECURITY INTERNATIONAL INC

ReleaseID: 564771