Prolong International Posts Q3 Results
27 October 1998
Prolong International Corp. Reports Third-quarter and Nine-month Results
IRVINE, Calif.--Oct. 27, 1998--Prolong International Corp. (AMEX:PRL) Tuesday announced results for the third quarter and nine-month period ended Sept. 30, 1998.
For the quarter, the company reported that sales reached a third quarter record of $9.7 million, increasing by 19.1% from $8.1 million for the comparable period a year ago. The sales growth marks the 11th consecutive increase in sales vs. the comparable quarter of the prior year.
Net income for the quarter was $484,131, or $0.02 per diluted share, compared with $687,680, or $0.03 per diluted share, in the third quarter a year ago.
For the quarter, sales from retail stores were $6.7 million, or 69.7% of total sales, compared with $3.1 million, or 37.8% of total sales for the same period a year ago. Direct response television infomercial (DRTV) sales were $1.3 million, or 13.1% of total sales, for the most recent period, compared with $4.1 million, or 50.0% of total sales, for the 1997 third quarter.
Other non-retail and international sales accounted for the balance of sales for the respective third quarters of 1998 and 1997.
Increases in selling, general and administrative (SG&A) expenses reduced earnings for the quarter and were primarily related to the ongoing expansion of retail store distribution. In its second quarter earnings announcement, the company had reported that higher SG&A and related operating expenses would continue through the fourth quarter of 1998.
Other related expenses included the research, development and test-marketing of new products, advertising and motorsports-related marketing programs.
Nine-month sales rose to a record $28.9 million, an increase of 38.4% from $20.9 million for the comparable period of the prior year. Net income increased 49.7% to $2.2 million, or $0.09 per diluted share, for the nine-month period vs. $1.5 million, or $0.06 per diluted share, for the comparable period of 1997.
For the nine-month period, sales from retail stores accounted for $20.9 million, or 72.4% of total sales, vs. $6.8 million, or 32.7% of total sales, during the comparable period a year ago. DRTV sales were $4.6 million, or 16.0% of total sales, in the most recent nine months compared with $11.5 million, or 54.9% of total sales, for the 1997 period.
Other non-retail and international sales accounted for the balance of sales in the respective nine-month periods of 1998 and 1997.
Commenting on the quarter, Prolong President and Chief Executive Officer Elton Alderman said: "We are pleased with the growth of the company and of retail sales during the third-quarter and nine-month periods of 1998. Increased SG&A spending has been necessary to build up infrastructure in our sales and marketing channels to sustain consistent growth and expand the Prolong brand.
"We are optimistic that we will realize returns from this investment on both the top and bottom lines during the years ahead."
Alderman concluded: "Looking ahead, we are confident that we can continue to strengthen the brand and drive top-line growth. Overall, the retail sales growth of the Prolong Super Lubricants line of products continues to be impressive, having increased by more than twofold year over year, while sell-through in existing retail channels remains healthy.
"We also expect our new infomercial to air by the end of the year, adding increased visibility to overall marketing and advertising efforts moving into 1999."
Prolong International, through its operating subsidiary, Prolong Super Lubricants, manufactures, markets and distributes a complete line of patented lubricants. The company's products are marketed and sold under the trademarked brand name "Prolong Super Lubricants(R)," and are used in automotive, industrial and consumer applications. Prolong products are sold throughout the United States and in selected international markets.
Certain statements in this news release that relate to financial results, projections, future plans, events, or performance, are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and involve significant risks and uncertainties, including but not limited to the following: competition, cost of components, product concentration and risk of declining selling prices. The company's actual results could differ materially from those anticipated in such forward-looking statements as a result of a number of factors. These risks and uncertainties, and certain other related factors, are discussed in the company's Form 10-K, Form 10-Q and other filings with the Securities and Exchange Commission. These forward-looking statements are made as of the date of this release, and the company assumes no obligation to update such forward-looking statements.
Prolong International Corp.
Summary Consolidated Statements of Operations
(unaudited)
Three Months Ended Nine Months Ended
Sept. 30, Sept. 30,
1998 1997 1998 1997
Net sales $ 9,662,580 $ 8,111,300 $28,911,150 $20,883,142
Cost of sales 2,460,591 1,443,856 6,107,805 4,098,139
Gross profit 7,201,989 6,667,444 22,803,345 16,785,003
Selling expenses 4,990,880 4,636,836 14,889,967 12,027,154
General and
administrative
expenses 1,337,663 885,691 4,063,476 2,335,525
Other income
(expense) (26,295) 67,023 25,541 177,027
Income before
taxes 847,151 1,211,940 3,875,443 2,599,351
Provision for
income taxes 363,020 524,260 1,669,020 1,125,009
Net income $ 484,131 $ 687,680 $ 2,206,423 $ 1,474,342
Net income per
common share
Basic $ 0.02 $ 0.03 $ 0.09 $ 0.06
Diluted $ 0.02 $ 0.03 $ 0.09 $ 0.06
Weighted average
shares outstanding
Basic shares
outstanding 25,464,575 25,579,391 25,464,525 25,538,823
Diluted shares
outstanding 25,561,864 25,846,419 25,862,128 25,736,556
Summary Consolidated Balance Sheet
Sept. 30, Dec. 31,
1998 1997
(unaudited) (audited)
Cash and cash equivalents $ 884,203 $ 6,180,983
Accounts receivable, net 7,236,746 3,880,571
Inventories, net 3,131,850 1,300,691
Other current assets 2,221,212 1,961,282
Total current assets 13,474,011 13,323,527
Total assets $16,951,591 $13,748,650
Accounts payable $ 1,094,278 $ 1,074,098
Accrued expenses 1,328,026 1,663,321
Income taxes payable 227,824 1,302,377
Total current liabilities 2,650,128 4,039,796
Notes payable, noncurrent 2,385,586 --
Shareholders' equity 11,915,877 9,708,854
Total liability and
shareholders' equity $16,951,591 $13,748,650