ToughBuilt Industries,
Inc. ("ToughBuilt") (NASDAQ: TBLT;
TBLTW), today reported financial results for the third
quarter ended September 30, 2021.
ToughBuilt’s Chief Executive Officer, Michael
Panosian, commented, “We achieved record sales in the third quarter
of 2021 and year-to-date revenue growth of 89% on an adjusted*
basis, driven by broad demand for our portfolio of products,
international expansion, and accelerated order volume for our new
two-in-one scraper/utility knife. Through our new retail
partnerships, we expanded our available store count by
approximately 1,400 in the quarter, which represents 14,400 total
worldwide stores we are able to ship into. Furthermore, we enhanced
our capabilities this past quarter with the hiring of several key
new logistic professionals and additional engineers and designers.
Already, our logistics team was able to secure favorable shipping
contracts, in which we expect to realize cost savings and gross
margin improvement in the coming quarters.” Mr. Panosian continued,
“Additionally, we significantly increased inventory in the third
quarter ahead of heavy order volume and shipments expected in the
holiday season. Considering our visibility into the end of the
year, we are providing guidance on a one-time basis of full year
2021 revenue growth of at least 77-87%.”
Nine Months Ended September 30, 2021 Financial
Highlights:
-
Revenues for the nine months ended September 30, 2021, were
approximately $45.4 million, an increase of 65% compared to the
same period in 2020. On an adjusted* basis, year-over-year revenue
growth was 89%. The increase in revenue was primarily the result of
wide acceptance of our products in the tool industry by new
customers, and follow-on orders from existing customers.
Three Months Ended September 30, 2021 Financial
Highlights:
-
Revenues for the third quarter of 2021 increased 3.3% to $17.2
million, compared to $16.7 million in the third quarter of 2020. On
an adjusted* basis, year-over-year revenue growth was 30%. The
increase in revenue was primarily the result of wide acceptance of
our products in the tool industry by new customers, international
expansion and accelerated orders for our two-in-one scraper/utility
knife.
-
Gross profit decreased to approximately $5.4 million in the third
quarter of 2021, compared to approximately $6.8 million in the
third quarter of 2020. Gross profit margins for the 2021 third
quarter were 31.6%, compared to 21.1% in the second quarter of
2021, and 41.0% in the same period in 2020. Margins continued to be
affected by industry-wide supply chain disruptions, which have led
to historically high shipping costs, as well as increased materials
costs.
-
Freight-in and custom duty fees for the nine months ended September
30, 2021 were capitalized in the third quarter and have been
reclassified from cost of goods sold to selling, general, &
administrative expenses. The total reclassification amount
reflected in the third quarter 2021 was approximately $1.96
million. As a result, gross margin was significantly impacted in
the third quarter 2021 from an accounting perspective, but there
was no effect on net income or loss.
-
Operating expenses were approximately $16.9 million in the third
quarter of 2021, compared to approximately $6.5 million in the
third quarter of 2020. The increase in operating expenses was
primarily due to increased shipping costs, partly attributed to the
reclassification of freight in and custom duty fees, increases in
marketing and advertising, and Amazon fees related to Amazon.com
sales.
- Net
loss attributable to common stockholders in the third quarter of
2021 was approximately $11.4 million, or approximately $0.09 per
share, as compared to net income of approximately $121,000, or flat
per share in the third quarter of 2020.
- Cash and cash
equivalents were $31.2 million as of September 30, 2021.
*adjusted revenue excludes a one-time customer order of
approximately $3.4 million in Q3’2020
Full Year 2021 Guidance:
Based on the timing of shipments anticipated in
the fourth quarter of 2021, management expects full year 2021
revenue in the range of $70-$74 million, representing 77-87%
year-over-year growth, and fourth quarter gross margin improvement
as a result of favorable shipping contracts secured in the third
quarter of 2021.
Conference Call Information:
Michael Panosian, Chief Executive Officer, and
Martin Galstyan, Chief Financial Officer, will host a conference
call to review the Company’s financial and operating results at
5:00pm ET today.
To attend the conference call, please dial one
of the teleconference numbers below or follow the live audio
webcast here: Q3 Earnings Call. Attendees are encouraged to dial in
to the conference call at least five minutes prior to the start
time.
U.S. TOLL-FREE:
1-855-327-6838INTERNATIONAL: 1-604-235-2082
To listen to a replay of the conference call,
please dial one of the teleconference numbers below. The replay
will also be available through the audio webcast link here: Q3
Earnings Call.
REPLAY U.S. TOLL-FREE:
1-844-512-2921REPLAY INTERNATIONAL:
1-412-317-6671REPLAY PIN: 10017218
ABOUT TOUGHBUILT INDUSTRIES, INC.ToughBuilt is
an advanced product design, manufacturer and distributor with
emphasis on innovative products. Currently focused on tools and
other accessories for the professional and do-it-yourself
construction industries. We market and distribute various home
improvement and construction product lines for both the
do-it-yourself and professional markets under the TOUGHBUILT brand
name, within the global multibillion dollar per year tool market
industry. All of our products are designed by our in-house design
team. Since launching product sales in 2013, we have experienced
significant annual sales growth. Our current product line includes
three major categories, with several additional categories in
various stages of development, consisting of Soft Goods &
Kneepads and Sawhorses & Work Products. Our mission is to
provide products to the building and home improvement communities
that are innovative, of superior quality derived in part from
enlightened creativity for our end users while enhancing
performance, improving well-being and building high brand loyalty.
Additional information about the Company is available at:
https://www.toughbuilt.com/.
NON-GAAP FINANCIAL MEASURESSome of the
financial information contained in this press release has not been
prepared in accordance with generally accepted accounting
principles in the United States (“GAAP”). Specifically, we have
adjusted our revenues for the three and nine month periods ended
September 30, 2020 (a non-GAAP financial measure) in calculating
our year-over-year growth of revenues to exclude a one-time order
of $3.4 million by a new customer. ToughBuilt considers the use of
revenue, on an adjusted basis (a non-GAAP measure), for the three
and nine month periods ended September 30, 2020 helpful to
investors in assessing our current financial performance, ongoing
operations and prospects for the future. Ongoing operations are the
ongoing revenue and expenses of the business, excluding certain
revenues that ToughBuilt does not anticipate to recur on a
quarterly basis or which do not reflect ongoing operations. These
measures are not necessarily comparable to similar measures that
may be presented by other companies and should not be considered in
isolation or as a substitute for the related GAAP measure. A
reconciliation of the non-GAAP measure to its GAAP counterpart is
included in the Appendix to this press release.
FORWARD-LOOKING STATEMENTSThis press release
contains “forward-looking statements.” Such statements may be
preceded by the words “intends,” “may,” “will,” “plans,” “expects,”
“anticipates,” “projects,” “predicts,” “estimates,” “aims,”
“believes,” “hopes,” “potential” or similar words. Forward-looking
statements are not guarantees of future performance, are based on
certain assumptions and are subject to various known and unknown
risks and uncertainties, many of which are beyond the Company’s
control, and cannot be predicted or quantified and consequently,
actual results may differ materially from those expressed or
implied by such forward-looking statements. Such risks and
uncertainties include, without limitation, risks and uncertainties
associated with (i) the impact of the worldwide COVID-19 pandemic
and government actions, on our business, (ii) supply chain
disruptions, (iii) market acceptance of our existing and new
products, (iv) delays in bringing products to key markets; (v) an
inability to secure regulatory approvals for the ability to sell
our products in certain markets, (vi) intense competition in our
industry from much larger, multinational companies, (vii) product
liability claims, (viii) product malfunctions, (ix) our limited
manufacturing capabilities and reliance on subcontractors for
assistance, (x) our efforts to successfully obtain and maintain
intellectual property protection covering our products or defend
ourselves from third parties’ infringement claims, (xi) our
reliance on a single supplier for certain product components, (xii)
the fact that we will need to raise additional capital to meet our
business requirements in the future and that such capital raising
may be costly, dilutive or difficult to obtain and (xiii) the fact
that we conduct business in multiple foreign jurisdictions,
exposing us to tariffs, foreign currency exchange rate
fluctuations, logistical and communications challenges, burdens and
costs of compliance with foreign laws and political and economic
instability in each jurisdiction and (xiv) changes in e-commerce
marketplaces. More detailed information about the Company and the
risk factors that may affect the realization of forward-looking
statements is set forth in the Company’s filings with the
Securities and Exchange Commission (SEC), including our Annual
Report on Form 10-K and our subsequent Quarterly Reports on Form
10-Q. Investors and security holders are urged to read these
documents free of charge on the SEC’s web site at
http://www.sec.gov. The Company encourages you to consider all of
these risks, uncertainties and other factors carefully in
evaluating the forward-looking statements contained in this press
release. As a result of these matters, changes in facts,
assumptions not being realized or other circumstances, the
Company's actual results may differ materially from the expected
results discussed in the forward-looking statements contained in
this press release. The forward-looking statements made in this
press release are made only as of the date of this press release,
and the Company undertakes no obligation to update them to reflect
subsequent events or circumstances.
Investor Relations Contact:KCSA Strategic
CommunicationsDavid Hanovertoughbuilt@kcsa.com
Source: ToughBuilt Industries, Inc
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