Mace(R) Security International, a Global Leader in Personal Self-Defense Sprays, Announces 4Q23 Financial Results - Seite 2

Fourth Quarter 2023 Financial Highlights

• Net sales were $1,683,000, down (21%) from the fourth quarter of 2022 net sales of $2,118,000. The decline from prior year was due to the continuing slowdown in retail sales in several of the Company's large retail customers as impulse sales were impacted by a slowing economy and the highest U.S. inflation rate experienced in decades. Mace achieved significant growth of 52% in e-commerce platform sales in the fourth quarter of 2023 compared with the fourth quarter of 2022.
• Gross profit rate of 22% decreased 11% from the same period in 2022 on decreased sales volume and higher freight and component costs. The modifications implemented to its operational cost structure during Q4, 2023 led to a 19% reduction in four-wall manufacturing costs on a quarter-over-quarter basis. This bodes well for margin improvement as revenue recovers. Product margins decreased over the fourth quarter of 2022 due to increasing component prices and lower manufacturing efficiency.
• Gross profit for the fourth quarter of 2023 decreased by $325,000, or 46%, from the fourth quarter of 2022, due primarily to the decline in sales volume and lower operating efficiencies.
• SG&A when adjusted for (a) non-recurring legal and financing costs of $62,000, (b) $60,000 related to the ongoing strategic alternatives project and (c) non-cash stock compensation expense of $43,000 was $942,000 in the fourth quarter of 2023, compared to SG&A when adjusted for $84,000 of expenses related primarily to transition payroll/temporary labor costs associated with the Company optimizing its headcount, and $51,000 of non-cash stock compensation expense was $945,000 in the same period in 2022. SG&A in both periods contains expenditures in support of the Company's commitment to its growth plan and the related cost for digital advertising.
• Based on the Company's annual valuation of goodwill using a discounted cash flow analysis at December 31, 2023, the Company concluded that the carrying amount for goodwill and long-lived assets was impaired. The Company determined the fair value of its property and equipment to be $54,000, resulting in a $250,000 impairment of property and equipment. Intangible assets were impaired $965,000, and goodwill was impaired $292,000, for a total asset impairment charge of $1,507,000 in the fourth quarter of 2023.
• Net loss of ($2,285,000) in the fourth quarter of 2023, compared with net loss of ($468,000) in the same quarter in 2022.
• Cash and cash equivalents increased to $239,000 as of December 31, 2023, an increase of $177,000 over the $62,000 on hand on December 31, 2022. $1,329,000 was drawn against the Company's $2,000,000 line of credit at December 31, 2023.
• Working capital decreased by $1,870,000 compared to December 31, 2022, with an increase in debt of $1,374,000 and a $350,000 decrease in accounts receivable on lower sales. Inventories decreased $740,000, and accounts payable increased $57,000. Inventory converted to finished goods ready for shipping as sales volume picks up increased $226,000, while raw material inventory declined $966,000, compared with December 31, 2022.
• Adjusted EBITDA for the fourth quarter 2023 was a loss of ($533,000) and excludes nonrecurring legal and financing costs, of expenses related primarily to the ongoing strategic alternatives project, non-cash stock compensation expense, and gain on derivative liability. Adjusted EBITDA for the fourth quarter 2022 was a loss of ($194,000).

Fourth Quarter 2023 Operational Highlights