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Ironclad Performance Wear Reports Record Fourth Quarter and Fiscal Year 2012 Results

February 27, 2013

2012 Net Sales Up 22%, Driving Record Net Income and Earnings Per Share

LOS ANGELES, Feb. 27, 2013 /PRNewswire/ — Ironclad Performance Wear Corporation (ICPW:OB), the recognized leader in high-performance task-specific work gloves, reported financial results for the fourth quarter and fiscal year ended December 31, 2012.

(Logo: http://photos.prnewswire.com/prnh/20060511/LATH052LOGO)

Fourth Quarter and Full Year 2012 Highlights

  • Fourth quarter Net Sales increased 40% to record $10.7 million, driving Net Income Before Taxes up 166% to a record $1.8 million.
  • Full year 2012 Net Sales were up 22% to a record $26.2 million, with Net Income up 174% to a record $3.1 million.
  • Major new product introductions in the fourth quarter included the Ironclad Mechanic glove, designed specifically for auto mechanics and technicians; and the Ironclad TouchScreen performance work glove that addresses the growing use of touchscreen devices. The Company also introduced the newest member to the KONG(TM) glove family, the Cut Resistant KONG, designed for the particular hazardous conditions found on an oil and gas platform.

Fourth Quarter 2012 Results
The Company reported Net Sales for the fourth quarter of 2012 of $10.7 million, an increase of 39.8% percent from the fourth quarter 2011 of $7.7 million.

Gross Profit increased 53.9% to $4.1 million, or 38.1% of Net Sales, compared to $2.7 million, or 34.6% of Net Sales in the fourth quarter of 2011.

Operating Expenses as a percent of Net Sales decreased to 20.5%, or $2.2 million, compared to 24.8% of Net Sales, or $1.9 million during the same period last year.

Income from Operations increased 151% to $1.9 million compared to $752,680 during the same period in 2011.

Net Income increased $2.0 million to $2.6 million, or $0.03 per share, in the fourth quarter 2011, compared to $605,857, or $0.01 per share, in the same period last year. $857,500 of this increase in Net Income is the result of recording a deferred tax benefit.

“As reported in our financial results, the fourth quarter was exceptional on virtually all fronts – sales, operating leverage and profitability,” said Scott Jarus, Chairman and CEO of Ironclad. “We experienced excellent growth within our international sales, industrial safety and co-branded private label channels, and the continuing growth in income from operations reflects the efficiencies and scalability of Ironclad’s business model.”

Fiscal 2012 Year-End Results
Full-year Net Sales for 2012 were $26.2 million, representing a 22.3% increase from the 2011 Net Sales of $21.4 million.

Gross Profit increased 26.2% to $10.1 million or 38.4% of Net Sales in 2012, compared to $8.0 million, or 37.2% of Net Sales for full-year 2011.

Operating Expenses as a percent of Net Sales decreased to 29.0%, or $7.6 million, compared to 30.4% of Net Sales, or $6.5 million for full-year 2011.

Income from Operations increased 69.1% to $2.5 million compared to an Income from Operations of $1.5 million for fiscal year 2011.

Net Income for 2012 increased to $3.1 million, or $0.04 per share, representing a 174% growth when compared to a Net Income of $1.1 million or $0.02 per share, in the prior year. A 30% reduction in the Company’s valuation allowance for deferred tax assets, primarily net operating loss carry-forwards, contributed $0.01 per share to the increase.

Mr. Jarus added, “2012 was an exceptionally successful year for Ironclad. The strength of the Ironclad brand, representing quality, innovation, performance and value, has drawn customers to our products and enabled us to not only grow business with our existing customers, but to add entirely new distribution channels, such as those in the retail automotive sector.”

2013 Outlook
Ironclad expects that its Net Sales for 2013 will increase by 10% to 15%, to approximately $28.8 million to $30.1 million. EBITDA, which also includes non-cash stock options expense (i.e. Earnings Before Interest, Taxes, Depreciation, Amortization and ASC 718 stock options expense) will be approximately $2.8 million, or even with 2012′s performance, primarily reflecting the Company’s desire to increase spending on its international expansion and marketing. Earnings per share will marginally increase. This guidance is based upon management’s outlook for organic growth only, and does not contemplate any acquisition opportunities which, if identified and concluded, are expected to be accretive to this 2013 guidance on both a Net Sales and Net Income basis.

“Our financial results for 2012 demonstrated the Company’s continuing ability to leverage its brand, innovative products and expertise to create and sustain growth and profitability,” said Mr. Jarus. “However, competition in 2013, particularly in the oil & gas industrial safety segment, has greatly intensified over the past year – a tribute to the stellar success of Ironclad’s KONG line of gloves. This competition is resulting in pricing pressures which we are actively addressing. Additionally, Ironclad will be introducing a new ‘re-featured’ less expensive line of KONG gloves for this industry which we believe will stunt any market share erosion caused by this increased competition. Our guidance for 2013 reflects the changing competitive landscape. We remain confident in our ability to continue to grow both our top and bottom lines and remain the industry leader in innovative high performance task-specific work gloves.”

Conference Call
Ironclad Performance Wear will hold a conference call to discuss 2012 financial results on Wednesday, February 27(th), at 1:30 p.m. Pacific Time (4:30 p.m. Eastern Time). To participate in the conference call, interested parties should dial (877) 941-8416 ten minutes prior to the call. International callers should dial 1+ (480) 629-9808. If you are unable to participate in the live call, a replay will be available from February 27(th) at 7:30 p.m. Eastern Time through 11:59 p.m. Eastern Time on March 13, 2013. To access the replay, dial (877) 870-5176 (passcode: 4599257). International callers should dial 1+ (858) 384-5517 and use the same passcode.

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 March 13, 2013.

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 and apparel 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 and Asia.

Built Tough for the Industrial Athlete(TM)

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 guidance about and achievement of financial goals and performance for 2013, increasing interest and sales of Ironclad’s products, market opportunities presented by new products and/or customers and Ironclad’s profitability in 2013. 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.

Information about Non-GAAP Financial Measures
This release contains disclosure regarding the non-GAAP financial measure “EBITDA, which also includes non-cash stock option expense (i.e. Earnings Before Interest, Taxes, Depreciation, Amortization and ASC 718 stock option expense).” The Company believes that disclosure regarding EBITDA, which also includes non-cash stock option expense, as a supplemental measure of performance improves the transparency of the Company’s disclosures. This non-GAAP financial measure is not a substitute for GAAP financial results, and should only be considered in conjunction with the Company’s financial information that is presented in accordance with GAAP.

Contacts
Scott Jarus, CEO
scottj@ironclad.com
(310) 643-7800 x120

Justin Vaicek
Liolios Group, Inc.
ICPW@liolios.com
(949) 574-3860

                                                    Ironclad Performance Wear Corp.
                                                 CONDENSED CONSOLIDATED BALANCE SHEETS

                                                     December 31, 2012                         December 31, 2011
                                                     -----------------                         -----------------
    ASSETS
      Current Assets
         Cash and cash equivalents                                            $721,588                            $1,060,125
         Accounts receivable (net of
          allowance for doubtful accounts
          of $48,000 and $37,000)                                            6,423,670                               798,004
         Due from factor                                                       915,492                             2,462,973
         Inventory net of reserve of
          $619,000 and $460,000                                              5,281,445                             4,449,315
         Deposits on Inventory                                                 716,273                               467,063
         Prepaid and other                                                     308,815                               265,652
         Deferred tax asset -Current                                           857,500                                     -
                                                                               -------                                   ---
      Total Current Assets                                                  15,224,783                             9,503,132

      Property and Equipment
         Computer equipment and software                                       515,058                               486,066
         Vehicles                                                               43,680                                43,680
         Office equipment and furniture                                        179,835                               162,871
         Leasehold improvements                                                 47,381                                43,589
         Less: accumulated depreciation                                       (529,917)                             (416,672)
                                                                              --------                              --------
      Total Property and Equipment,
       net                                                                     256,037                               319,534

      Other Assets
         Trademarks and patents (net of
          accumulated amortization of
          $40,318 and $31,915)                                                 132,168                               131,412
         Deposits                                                               10,204                                11,354
                                                                                ------                                ------
      Total Other Assets                                                       142,372                               142,766

    Total Assets                                                           $15,623,192                            $9,965,432
                                                                           ===========                            ==========

    LIABILITIES & STOCKHOLDERS'
     EQUITY
      Current Liabilities
         Accounts payable and accrued
          expenses                                                          $4,932,648                            $2,560,504
         Line of credit                                                      1,483,883                             1,661,220
                                                                             ---------                             ---------
      Total current liabilities                                              6,416,531                             4,221,724

      Total Liabilities                                                      6,416,531                             4,221,724

      Stockholder's Equity
         Common stock, $.001 par value;
          172,744,750 shares authorized;
          76,447,587 and 74,550,754
          shares issued and outstanding
          at December 30, 2012 and
          December 31, 2011, respectively

                                          76,448                                        74,551
         Additional paid in capital                                         18,920,811                            18,538,563
         Accumulated deficit                                                (9,790,598)                          (12,869,406)
                                                                            ----------                           -----------
      Total Stockholders' Equity                                             9,206,661                             5,743,708
                                                                             ---------                             ---------

    Total Liabilities &
     Stockholders' Equity                                                  $15,623,192                            $9,965,432
                                                                           ===========                            ==========

                                                                                    Ironclad Performance Wear Corp.
                                                                            CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

                                            Three Months Ended                            Twelve Months Ended
                                            ------------------                            -------------------
                                            December 31, 2012                              December 31, 2011                December 31, 2012              December 31, 2011
                                            -----------------                              -----------------                -----------------              -----------------

    REVENUES
             Net sales                                         $10,739,170                                      $7,682,394                    $26,180,114                    $21,401,002

    COST OF SALES
             Cost of sales                                       6,646,450                                       5,023,271                     16,129,474                     13,439,562

    GROSS PROFIT                                                 4,092,720                                       2,659,123                     10,050,640                      7,961,440

    OPERATING EXPENSES
             General and administrative                          1,020,850                                         795,336                      3,185,662                      2,566,152
             Sales and marketing                                   673,308                                         721,009                      2,591,725                      2,583,111
             Research and development                              158,354                                         116,526                        541,171                        365,481
              Purchasing, warehousing and
              distribution                                         307,905                                         239,908                      1,112,492                        858,758
             Depreciation and amortization                          40,233                                          33,665                        158,069                        132,483

             Total Operating Expenses                            2,200,650                                       1,906,444                      7,589,119                      6,505,985

    INCOME FROM OPERATIONS                                       1,892,070                                         752,679                      2,461,521                      1,455,455

    OTHER INCOME (EXPENSE)
             Interest expense                                      (22,434)                                        (32,291)                       (50,145)                       (94,407)
             Interest income                                            77                                              50                         21,463                             89
             Other income (expense), net                           (20,468)                                              -                         55,419                            700
              Gain (Loss) on disposition of
              equipment                                                 50                                         (24,582)                            50                        (25,720)

             Total Other Income (Expense)                          (42,775)                                        (56,823)                        26,787                       (119,338)

    NET INCOME BEFORE INCOME TAXES                               1,849,295                                         695,856                      2,488,308                      1,336,117

    PROVISION FOR INCOME TAXES                                    (150,000)                                        (90,000)                      (267,000)                      (213,950)
    DEFERRED INCOME TAX BENEFIT                                    857,500                                               -                        857,500                              -
                                                                   -------                                             ---                        -------                            ---

    NET INCOME                                                  $2,556,795                                        $605,856                     $3,078,808                     $1,122,167
                                                                ==========                                        ========                     ==========                     ==========

    NET INCOME PER COMMON SHARE
             Basic                                                   $0.03                                           $0.01                          $0.04                          $0.02

             Diluted                                                 $0.03                                           $0.01                          $0.04                          $0.01

    WEIGHTED AVERAGE COMMON SHARES
             OUTSTANDING
             Basic                                              76,403,179                                      73,816,955                     76,028,200                     73,446,414

             Diluted                                            86,016,780                                      84,293,491                     85,641,801                     83,922,950

SOURCE Ironclad Performance Wear Corporation


Source: PR Newswire