Prolong International Corp. Reports First-Quarter 1999 Results
12 May 1999
Prolong International Corp. Reports First-Quarter 1999 Results; Anticipates Strong Second Quarter
IRVINE, Calif.--May 12, 1999--Prolong International Corp. (Amex: PRL) Wednesday reported financial results for the quarter ended March 31, 1999.For the first quarter of 1999, the Company reported a net loss of $127,891 on net sales of $9.7 million compared to net income of $1.6 million, or $0.06 per diluted share, on net sales of $10.8 million in the same period a year ago.
Gross profit was $7.1 million, or 72.7% of net sales, compared to gross profit of $8.8 million, or 81.5% of net sales, in the first quarter of 1998.
The Company attributed the decline in gross margins to the higher costs of new packaging (introduced in the second quarter of 1998) for the lubricant products; one-time display costs associated with the recent introduction of the automotive appearance products; and the fact that appearance products have slightly lower margins than lubricant products.
During the quarter just ended, automotive appearance products accounted for approximately 26% of net sales.
The increase in selling expenses -- to $5.6 million, or 57.2% of net sales, from $4.7 million, or 43.7% of net sales, in the same period a year ago -- was due to an increase in sales personnel, higher marketing allowances to retail customers, additional promotional and motorsports expenses, and additional expenditures for print and television advertising in support of the marketing launch for the appearance products line.
General and administrative expenses were $1.7 million, or 17.0% of sales, compared to $1.3 million, or 12.4% of sales, in the first quarter of 1998. The Company attributed the increase to additional salaries for new employees, costs related to the design of the Company's new web site, and higher legal expenses.
Elton Alderman, President and Chief Executive Officer of Prolong International, said that first-quarter results were essentially in line with internal projections.
"We are pleased with the increase of almost 60% in net sales over the fourth quarter of 1998, a considerable portion of which can be credited to the introduction of our new product line," said Alderman.
"The lower net sales versus the same period a year ago," he noted, "reflect a large initial stocking order from a new retailer in the first quarter of 1998. However, with record monthly sales in April 1999 exceeding $5 million, sizeable reorders from our mass merchandisers, and the recent additions of Canadian Tire, Wal-Mart, and Target to our growing base of retailers, we anticipate that revenues in the second quarter of 1999 will exceed revenues during the same period in 1998."
In the second quarter of 1998 the Company reported net sales of $8.4 million.
Sales to retail distributors in the first quarter of 1999 were $8.0 million, or 82.2% of total sales, compared to $8.1 million, or 74.2% of total sales, for the same period a year ago. Direct-response television (DRTV) sales were $1.1 million, or 10.8% of total sales, for the most recent period compared to $2.0 million, or 18.0% of total sales, in the first quarter of 1998.
Other non-retail and international sales accounted for the balance of sales in the first quarters of 1999 and 1998.
Prolong International, through its operating subsidiaries, manufactures, markets and distributes a complete line of patented lubricant and proprietary automotive appearance products. The Company's products are marketed and sold under the brand name Prolong Super Lubricants(R) and are used in automotive, industrial and consumer applications.
Prolong products are sold throughout the U.S. 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
Three Months Ended
March 31,
1999 1998
(unaudited) (unaudited)
Net sales $9,749,872 $10,848,742
Cost of sales 2,657,939 2,005,414
Gross profit 7,091,933 8,843,328
Selling expenses 5,573,895 4,740,601
General and administrative
expenses 1,665,015 1,342,704
Other income (expense) (48,914) 59,545
Income (loss) before taxes (195,891) 2,819,568
Provision (benefit) for
income taxes (68,000) 1,213,000
Net income (loss) ($127,891) $1,606,568
Net income (loss) per
common share:
Basic ($0.00) $0.06
Diluted ($0.00) $0.06
Weighted average shares
outstanding:
Basic 28,445,835 25,464,500
Diluted 28,445,835 25,890,255
March 31, December 31,
1999 1998
(unaudited) (audited)
Cash and cash equivalents $289,714 $1,127,861
Accounts receivable, net 7,271,746 4,950,055
Inventories, net 3,604,924 2,915,249
Other current assets 3,072,746 2,760,139
Total current assets 14,239,130 11,753,304
Noncurrent assets 11,486,764 11,457,568
Total assets $25,725,894 $23,210,872
Accounts payable $3,006,133 $1,878,418
Accrued expenses 1,507,135 1,502,114
Loans payable to bank 1,500,000 0
Income taxes payable - -
Total current liabilities 6,013,268 3,380,532
Notes payable, noncurrent 2,364,181 2,376,005
Shareholders' equity 17,348,445 17,454,335
Total liabilities and
shareholders' equity $25,725,894 $23,210,872