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Ironclad Performance Wear Reports First Quarter 2017 Results
FARMERS BRANCH, TX – May 15, 2017 – Ironclad Performance Wear Corporation (ICPW:OTCQB), the recognized leader in high-performance task-specific work gloves, reported unaudited financial results for the first quarter ended March 31, 2017.
First Quarter 2017 Results
The Company reported Net Sales for the first quarter of 2017 of $4.46 million, a decrease of 11.7% from the first quarter total of $5.05 million for 2016. The sales decrease was primarily attributable to two factors:
First, a decrease in sales to our Australian distributor, Performance On Hand (“POH”), primarily due to a delay in purchases as they go through an upcoming product line review with their largest retail customer. Due to this line review, our distributor will not make purchases until their customer’s new assortment is finalized.
Excluding sales to POH, sales for the first quarter of fiscal 2017 increased 4.7% over the first quarter of fiscal 2016.
Second, a decrease in sales of approximately $620,000 or 12% of 2016 Q1 sales to the former master distributor of our Kong product, due to the termination of our master distributor agreement with them. Q1 2016 represented the last quarter of significant sales to this former master distributor.
Partially offsetting the decreases above, the Company recorded significant growth in its retail segment.
Gross Profit was $1.56 million, or 34.9% of Net Sales in the first quarter of 2017, compared to $1.82 million, or 36.1% of Net Sales in the first quarter of 2016. The decrease in the Gross Margin percentage is primarily attributable to the mix of sales and fixed costs being spread over a lower net sales number.
Operating Expenses in the first quarter were $2.25 million or 50.4% of Net Sales, as compared to $2.14 million or 42.5% of Net Sales during the same period last year. The increased spending for the first three months of 2017 was primarily driven by two factors: increased wages, benefits and sales related travel due to an increase in our number of field sales people and an increase in headcount required to service the Grainger business and generate new business.
Loss from Operations in the first quarter of 2017 was $692,000, or (15.5%) of Net Sales, as compared to a loss of $323,000, or (6.4%) of Net Sales, during the same period in 2016.
Net Loss for the first quarter of 2017 was $767,000, or $0.01 per share, as compared to a loss of $358,000, or $0.00 per share, in the same period last year.
Ironclad’s Chief Executive Officer, Jeffrey Cordes, commented: “As we have stated on numerous occasions, especially with large customers, both ours directly and those of our distributors, we have experienced and will continue to have quarterly fluctuations in our revenue totals. Our focus must be on our full year results that balance out these fluctuations and present a better view of the overall performance of our company. We are working closely with Performance on Hand, our Australian distributor and are excited about the line offering being presented to Bunnings, a long time major buyer of Ironclad products.
Looking at 1st quarter results we are very pleased with the continued expansion of our retail business, driven by a more than 100% increase with Amazon, the roll out of our new full year assortment at Menards, and a rapidly expanding tactical business.
Our industrial business recorded Grainger receipts that nearly matched those achieved during their substantial Q1 2016 stocking roll out. The other industrial business segments recorded nearly a 50% increase in revenues that offset a significant part of the final quarter revenue decline of the old ORR Safety program.
Internationally, we now have representation in more than twenty five countries around the globe, as compared to approximately five at this time a year ago, and continue to add to this network. During Q1, this distributor network drove sales of more than $800,000, more than double the volume of the prior year quarter. A key part of this increase was driven by our new South American distributor network.
We have seen improvements in our working capital this quarter and expect this trend to continue as well. We remain confident of our full year double digit growth expectations.”
Conference Call
Ironclad Performance Wear will hold a conference call to discuss first quarter 2017 financial results on Monday, May 15th, at 3:30 p.m. Central Time (4:30 p.m. Eastern Time). To participate in the conference call, interested parties should dial:
Date: Monday, May 15, 2017
Time: 4:30 p.m. Eastern Time (3:30 p.m. Central Time)
Domestic Dial-In Number: (800) 311-6662
International Dial-In Number: (719) 457-2623
Conference ID Number: 8342054
The conference call will be broadcast simultaneously and available for replay at: http://public.viavid.com/index.php?id=124437 and via the landing page of the Company's Website at www.ironclad.com.
Replay Dial-In Numbers:
TOLL-FREE 1-844-512-2921
TOLL/INTERNATIONAL 1-412-317-6671
From: 05/15/17 at 7:30 pm Eastern Time
To: 06/15/17 at 11:59 pm Eastern Time
Replay Pin Number: 8342054
In addition, the conference call will also be broadcast live over the Internet and can be accessed at www.ironclad.com. For those unable to participate during the live broadcast, the Webcast will be archived on this site through June 15, 2017.
The Company's financial results will be posted online at www.ironclad.com once they are publicly released.
About Ironclad Performance Wear Corporation
Ironclad Performance Wear is a leader in high-performance task-specific work gloves. It created the performance work glove category in 1998, and continues to leverage its leadership position in the safety, construction and industrial markets through the design, development and distribution of specialized task-specific gloves for industries such as oil & gas extraction; automotive; and police, fire, first-responder and military. Ironclad engineers and manufactures its products with a focus on innovation, design, advanced material science and durability. Ironclad's gloves are available through industrial suppliers, hardware stores, home centers, lumber yards, and sporting goods retailers nationwide; and through authorized distributors in North America, Europe, Australia, Middle East, Asia and South America.
Built Tough for the Industrial Athlete™
For more information on Ironclad, please visit the Company's Website at www.ironclad.com.
Information about Forward-Looking Statements
This release contains "forward-looking statements" that include information relating to future events and future financial and operating performance. Forward-looking statements should not be read as a guarantee of future performance or results, and will not necessarily be accurate indications of the times at, or by, which that performance or those results will be achieved. Forward-looking statements are based on information available at the time they are made and/or management's good faith belief as of that time with respect to future events, and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Important factors that could cause these differences include, but are not limited to: fluctuations in demand for Ironclad's products, the introduction of new products, Ironclad's ability to maintain customer and strategic business relationships, the impact of competitive products and pricing, growth in targeted markets, the adequacy of Ironclad's liquidity and financial strength to support its growth, and other information that may be detailed from time-to-time in Ironclad's filings with the United States Securities and Exchange Commission. Examples of such forward looking statements in this release include statements regarding expanding our base of retailers and distributors, anticipated sales to customers, and anticipated growth and profitability. For a more detailed description of the risk factors and uncertainties affecting Ironclad, please refer to the Company's recent Securities and Exchange Commission filings, which are available at www.sec.gov. Ironclad undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Contact
William Aisenberg, CFO
Bill.Aisenberg@ironclad.com
(972) 996-5664
IRONCLAD PERFORMANCE WEAR CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
March 31, 2017 (unaudited) | December 31, 2016 | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS | ||||||||
| Cash and cash equivalents | $ | 290,311 | $ | 299,904 | ||||
| Accounts receivable, net of allowance for doubtful accounts of $30,000 and $30,000 | 5,555,550 | 7,968,513 | ||||||
| Inventory, net of reserve of $197,549 and $197,549 | 7,959,774 | 8,733,315 | ||||||
| Deposits on inventory | 108,597 | 108,597 | ||||||
| Prepaid and other | 801,418 | 575,403 | ||||||
| Total current assets | 14,715,650 | 17,685,732 | ||||||
| PROPERTY AND EQUIPMENT | ||||||||
| Computer equipment and software | 321,320 | 294,117 | ||||||
| Office equipment and furniture | 379,752 | 343,499 | ||||||
| Leasehold improvements | 140,717 | 140,718 | ||||||
| Less: accumulated depreciation | (407,734 | ) | (357,204 | ) | ||||
| Total property and equipment, net | 434,055 | 421,130 | ||||||
| Trademarks and patents, net of accumulated amortization of $85,441 and $81,260 | 231,557 | 235,738 | ||||||
| Deposits and other assets | 739,680 | 451,582 | ||||||
| Total other assets | 971,237 | 687,320 | ||||||
| Total Assets | $ | 16,120,942 | $ | 18,794,182 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| CURRENT LIABILITIES | ||||||||
| Accounts payable and accrued expenses | $ | 2,295,436 | $ | 4,674,106 | ||||
| Line of credit | 4,484,446 | 4,248,070 | ||||||
| Total current liabilities | 6,779,882 | 8,922,176 | ||||||
| Deferred Tax Liability | 26,292 | — | ||||||
| Total Liabilities | 6,806,174 | 8,922,176 | ||||||
| STOCKHOLDERS’ EQUITY | ||||||||
| Common stock, $.001 par value; 172,744,750 shares authorized; 85,646,354 and 84,500,454 shares issued and outstanding at March 31, 2017 and December 31, 2016, respectively | 85,646 | 84,500 | ||||||
| Additional paid-in capital | 21,491,424 | 21,282,588 | ||||||
| Accumulated deficit | (12,262,302 | ) | (11,495,082 | ) | ||||
| Total Stockholders’ Equity | 9,314,768 | 9,872,006 | ||||||
| Total Liabilities and Stockholders’ Equity | $ | 16,120,942 | $ | 18,794,182 | ||||
IRONCLAD PERFORMANCE WEAR CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
Three Months Ended March 31, | Three Months Ended March 31, | |||||||
| 2017 | 2016 | |||||||
| REVENUES | ||||||||
| Net sales | $ | 4,458,843 | $ | 5,046,783 | ||||
| COST OF SALES | ||||||||
| Cost of sales | 2,903,247 | 3,225,842 | ||||||
| GROSS PROFIT | 1,555,596 | 1,820,941 | ||||||
| OPERATING EXPENSES | ||||||||
| General and administrative | 783,064 | 892,148 | ||||||
| Sales and marketing | 946,789 | 722,222 | ||||||
| Research and development | 147,305 | 162,752 | ||||||
| Purchasing, warehousing and distribution | 316,216 | 326,246 | ||||||
| Depreciation and amortization | 54,710 | 40,326 | ||||||
| Total operating expenses | 2,248,084 | 2,143,694 | ||||||
| LOSS FROM OPERATIONS | (692,488 | ) | (322,753 | ) | ||||
| OTHER INCOME (EXPENSE) | ||||||||
| Interest expense | (48,480 | ) | (36,187 | ) | ||||
| Interest income | 37 | — | ||||||
| Total other expense | (48,443 | ) | (36,187 | ) | ||||
| LOSS BEFORE BENEFIT FROM INCOME TAXES | (740,931 | ) | (358,940 | ) | ||||
| (PROVISION FOR) BENEFIT FROM INCOME TAXES | (26,292 | ) | 670 | |||||
| NET LOSS | $ | (767,223 | ) | (358,270 | ) | |||
| NET LOSS PER COMMON SHARE | ||||||||
| Basic | $ | (0.01 | ) | (0.00 | ) | |||
| Diluted | $ | (0.01 | ) | (0.00 | ) | |||
| WEIGHTED AVERAGE COMMON SHARES OUTSTANDING | ||||||||
| Basic | 85,017,430 | 83,011,751 | ||||||
| Diluted | 85,017,430 | 83,011,751 | ||||||