Attached files
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| 8-K - KATY INDUSTRIES, INC 8-K 5-3-2016 - KII Liquidating Inc. | form8k.htm |
Exhibit 99.1
KATY NEWS
FOR IMMEDIATE RELEASE
KATY INDUSTRIES, INC.
REPORTS 2016 FIRST QUARTER RESULTS
| - | Net sales increased 33% over prior year |
| - | Gross profit increased $1.4 million over prior year |
| - | Operating income increased $1.4 million over prior year with the exclusion of one-time items |
St. Louis, MO – May 3, 2016 – Katy Industries, Inc. (Pink: KATY), a leading manufacturer, importer and distributor of commercial cleaning and consumer storage products, as well as a contract manufacturer of structural foam products, today reported financial results for the first quarter ended April 1, 2016.
“We are pleased that the first Quarter continued to show improvement in our operations,” said David J. Feldman, Katy Chief Executive Officer. “Sales demand remains strong and we will continue to have gains in operating income throughout 2016 by capitalizing on the synergies of our acquisitions and manufacturing realignment.”
Year-to-Date Financial Results
Financial highlights for the three months ended April 1, 2016 as compared to the three months ended March 27, 2015, included:
| ● | Net sales increased 33.2% from $21.3 million during the three months ended March 27, 2015 to $28.4 million during the three months ended April 1, 2016. The increase was a result of the Tiffin, Ohio business acquisition, which contributed an incremental $6.5 million in net sales. Gross margin was 16.3% for the three months ended April 1, 2016, an increase of 130 basis points from the same period a year ago. The increase was primarily a result of lower operating costs associated with the relocation of our Bridgeton, Missouri facility to Jefferson City, Missouri and reduced raw material prices during the three months ended April 1, 2016. As a result of the increase in sales and an increase in gross margin, our gross profit increased $1.4 million from $3.2 million to $4.6 million. |
| ● | Selling, general and administrative expenses increased $0.7 million to $4.0 million for the three months ended April 1, 2016 from $3.3 million for the same period a year ago. The increase was primarily due to the derecognition of a deferred lease obligation no longer owed as a result of our termination of the lease for our Bridgeton, Missouri facility during the three months ended March 27, 2015. |
| ● | Severance, restructuring and related charges decreased $1.1 million to $0.5 million for the three months ended April 1, 2016 as compared to $1.6 million for the three months ended March 27, 2015 due to the relocation of our Bridgeton, Missouri facility to Jefferson City, Missouri. |
| ● | Operating income increased from an operating loss of $1.6 million during the three months ended March 27, 2015 to operating income of $0.1 million during the three months ended April 1, 2016 primarily due to the reduction of severance, restructuring and related charges and increased gross profit. With the exclusion of one-time items related to our facility relocation, operating income was $0.7 million for the three months ended April 1, 2016 versus an operating loss of $0.7 million for the three months ended March 27, 2015. |
| ● | Interest expense increased by $1.2 million during the three months ended April 1, 2016 as compared to the three months ended March 27, 2015 as a result of the increased borrowings under the BMO Credit Agreement and Second Lien Credit Agreement which were entered into in the second quarter of 2015. |
| ● | Overall, we reported a net loss of $1.2 million, or $0.15 per basic and diluted share, for the three months ended April 1, 2016, as compared to net loss of $1.8 million, or $0.23 per basic and diluted share, for the three months ended March 27, 2015. With the exclusion of one-time items related to our facility relocation, net loss was $0.6 million for the three months ended April 1, 2016 versus net loss of $1.0 million for the three months ended March 27, 2015. |
Liquidity and Capital Resources
Cash used in operating activities before changes in operating assets and liabilities was $1.2 million in the three months ended March 27, 2015 as compared to $0.1 million in the same period of 2016. Changes in operating assets and liabilities from continuing operations provided $2.1 million in the three months ended April 1, 2016 as compared to $2.3 million in the same period of 2015.
Cash flows used by investing activities of $0.7 million in the three months ended April 1, 2016 were primarily due to capital expenditures related to the relocation of the Bridgeton, Missouri facility to Jefferson City, Missouri.
Cash flows used by financing activities of $1.3 million in the three months ended April 1, 2016 were due to a reduction of $0.8 million in our bank borrowings, net of debt issuance costs since December 31, 2015, primarily due to the timing of needed borrowings.
Non-GAAP Financial Measures
This press release may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities and Exchange Act of 1934, as amended. Forward-looking statements include all statements of the Company’s plans, beliefs or expectations with respect to future events or developments and often may be identified by such words or phrases as “anticipates,” “believes,” “estimates,” “expects,” “intends,” “plans,” “projects,” “may,” “should,” “will,” “continue,” “is subject to,” or similar expressions. These forward-looking statements are based on the opinions and beliefs of Katy’s management, as well as assumptions made by, and information currently available to, the Company’s management. Additionally, the forward-looking statements are based on Katy’s current expectations and projections about future events and trends affecting the financial condition of its business. The forward-looking statements are subject to risks and uncertainties that may lead to results that differ materially from those expressed in any forward-looking statement made by the Company or on its behalf. These risks and uncertainties include, without limitation, conditions in the general economy and in the markets served by the Company, including changes in the demand for its products; success of any restructuring or cost control efforts; an increase in interest rates; competitive factors, such as price pressures and the potential emergence of rival technologies; interruptions of suppliers’ operations or other causes affecting availability of component materials or finished goods at reasonable prices; changes in product mix, costs and yields; labor issues at the Company’s facilities or those of its suppliers; legal claims or other regulatory actions; and other risks identified from time to time in the Company’s filings with the SEC, including its Report on Form 10-K for the year ended December 31, 2015. Katy undertakes no obligation to revise or update such statements to reflect current events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
Katy Industries, Inc. is a diversified corporation focused on the manufacture, import and distribution of commercial cleaning products, consumer home products and a contract manufacturer of structural foam products.
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Company contact:
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Katy Industries, Inc.
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Curt Kroll
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(314) 656-4381
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KATY INDUSTRIES, INC. SUMMARY OF OPERATIONS AND
COMPREHENSIVE LOSS - UNAUDITED
(In thousands, except per share data)
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Three Months Ended
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||||||||
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April 1,
2016
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March 27,
2015
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|||||||
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Net sales
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$
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28,394
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$
|
21,310
|
||||
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Cost of goods sold
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23,774
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18,105
|
||||||
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Gross profit
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4,620
|
3,205
|
||||||
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Selling, general and administrative expenses
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3,955
|
3,252
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||||||
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Severance, restructuring and related charges
|
526
|
1,600
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||||||
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Operating income (loss)
|
139
|
(1,647
|
)
|
|||||
|
Interest expense
|
(1,392
|
)
|
(209
|
)
|
||||
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Other, net
|
30
|
28
|
||||||
|
Loss before income tax expense
|
(1,223
|
)
|
(1,828
|
)
|
||||
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Income tax expense
|
(6
|
)
|
(8
|
)
|
||||
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Net loss
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$
|
(1,229
|
)
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$
|
(1,836
|
)
|
||
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Other comprehensive income (loss):
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||||||||
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Foreign currency translation
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23
|
(58
|
)
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|||||
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Total comprehensive loss
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$
|
(1,206
|
)
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$
|
(1,894
|
)
|
||
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Loss per share of common stock - Basic
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$
|
(0.15
|
)
|
$
|
(0.23
|
)
|
||
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Loss per share of common stock - Diluted
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$
|
(0.15
|
)
|
$
|
(0.23
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)
|
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KATY INDUSTRIES, INC. BALANCE SHEETS – UNAUDITED
(In thousands)
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April 1,
2016
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December 31,
2015
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|||||||
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Assets
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||||||||
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Current Assets:
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||||||||
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Cash
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$
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63
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$
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53
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||||
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Accounts receivable, net
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14,171
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12,211
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||||||
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Inventories, net
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16,194
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19,267
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||||||
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Other current assets
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1,564
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2,164
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||||||
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Total current assets
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31,992
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33,695
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||||||
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Other Assets:
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||||||||
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Goodwill
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8,377
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8,377
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||||||
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Intangibles, net
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20,608
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20,877
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||||||
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Other
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1,761
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1,747
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||||||
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Total other assets
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30,746
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31,001
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||||||
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Property and Equipment:
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||||||||
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Land and improvements
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535
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535
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||||||
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Buildings and improvements
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6,696
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6,269
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||||||
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Machinery and equipment
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45,815
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44,617
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||||||
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53,046
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51,421
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|||||||
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Less - Accumulated depreciation
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(37,122
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)
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(36,646
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)
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Property and equipment, net
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15,924
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14,775
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||||||
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Total assets
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$
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78,662
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$
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79,471
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||||
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Liabilities and Stockholders' Deficit
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Current Liabilities:
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||||||||
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Accounts payable
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$
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21,725
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$
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20,440
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||||
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Book overdraft
|
486
|
918
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||||||
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Accrued compensation
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1,077
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1,149
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||||||
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Accrued expenses
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7,271
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7,142
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||||||
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Deferred revenue
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93
|
130
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||||||
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Current maturities of long-term debt
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1,663
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1,143
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||||||
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Revolving credit agreement
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23,093
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23,969
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||||||
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Total current liabilities
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55,408
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54,891
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||||||
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Payable to Related Party
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4,419
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4,268
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||||||
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Long-Term Debt
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21,093
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21,435
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Other Liabilities
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7,686
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7,615
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||||||
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Total liabilities
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88,606
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88,209
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||||||
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Stockholders' Deficit
|
||||||||
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15% Convertible preferred stock, $100 par value; authorized 1,200,000 shares; issued and outstanding 1,131,551 shares; liquidation value $113,155
|
108,256
|
108,256
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||||||
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Common stock, $1 par value; authorized 35,000,000 shares; issued 9,822,304 shares
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9,822
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9,822
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||||||
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Additional paid-in capital
|
27,110
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27,110
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||||||
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Accumulated other comprehensive loss
|
(1,608
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)
|
(1,631
|
)
|
||||
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Accumulated deficit
|
(132,087
|
)
|
(130,858
|
)
|
||||
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Treasury stock, at cost, 1,871,128 shares
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(21,437
|
)
|
(21,437
|
)
|
||||
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Total stockholders' deficit
|
(9,944
|
)
|
(8,738
|
)
|
||||
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Total liabilities and stockholders' deficit
|
$
|
78,662
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$
|
79,471
|
||||
KATY INDUSTRIES, INC. STATEMENTS OF CASH FLOWS – UNAUDITED
(In thousands)
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Three Months Ended
|
||||||||
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April 1,
2016
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March 27,
2015
|
|||||||
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Cash flows from operating activities:
|
||||||||
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Net loss
|
$
|
(1,229
|
)
|
$
|
(1,836
|
)
|
||
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Depreciation
|
504
|
545
|
||||||
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Amortization of intangible assets
|
268
|
47
|
||||||
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Amortization of debt issuance costs
|
37
|
57
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||||||
|
Stock-based compensation
|
32
|
20
|
||||||
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Payment In Kind interest expense
|
280
|
-
|
||||||
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Other
|
(20
|
)
|
-
|
|||||
|
(128
|
) |
(1,167
|
)
|
|||||
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Changes in operating assets and liabilities:
|
||||||||
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Accounts receivable
|
(1,975
|
)
|
(519
|
)
|
||||
|
Inventories
|
3,031
|
(2,522
|
)
|
|||||
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Other assets
|
479
|
(726
|
)
|
|||||
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Accounts payable
|
847
|
4,426
|
||||||
|
Accrued expenses
|
(114
|
)
|
764
|
|||||
|
Payable to related party
|
125
|
125
|
||||||
|
Deferred revenue
|
(37
|
)
|
(37
|
)
|
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Other liabilities
|
(304
|
)
|
760
|
|||||
|
2,052
|
2,271
|
|||||||
|
Net cash provided by operations
|
1,924
|
1,104
|
||||||
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Cash flows from investing activities:
|
||||||||
|
Capital expenditures
|
(748
|
)
|
(362
|
)
|
||||
|
Net cash used in investing activities
|
(748
|
)
|
(362
|
)
|
||||
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Cash flows from financing activities:
|
||||||||
|
Net borrowings on revolving credit facility
|
(876
|
)
|
(199
|
)
|
||||
|
Payment on capital lease obligation
|
(23
|
)
|
-
|
|||||
|
Decrease in book overdraft
|
(432
|
)
|
(349
|
)
|
||||
|
Direct costs associated with debt facilities
|
62
|
-
|
||||||
|
Net cash used in financing activities
|
(1,269
|
)
|
(548
|
)
|
||||
|
Effect of exchange rate changes on cash
|
103
|
(117
|
)
|
|||||
|
Net increase in cash
|
10
|
77
|
||||||
|
Cash, beginning of period
|
53
|
66
|
||||||
|
Cash, end of period
|
$
|
63
|
$
|
143
|
||||
|
Supplemental cash flows disclosure:
|
||||||||
|
Interest paid
|
$
|
843
|
$
|
127
|
||||
|
Income taxes paid
|
$
|
1
|
$
|
1
|
||||
|
Supplemental information of non-cash investing and financing activities:
|
||||||||
|
Capital leases included in accrued expenses and other noncurrent liabilities
|
$
|
473
|
$
|
-
|
||||
|
Capital expenditures included in accounts payable
|
$
|
429
|
$
|
-
|
||||
|
Collateralized debt fees included in accrued expenses
|
$
|
240
|
$
|
-
|
||||