Capstone Companies, Inc. Reports Record Third Quarter 2017 Revenue
- Record year-to-date revenue of $30.8 million
- Record quarterly and year-to-date gross profit
- Record year-to-date operating income
DEERFIELD BEACH, Fla.–(BUSINESS WIRE)–#capstonecompaniesinc–Capstone Companies, Inc. (OTC: CAPC) (“Capstone” or the “Company”), a
designer of innovative LED lighting solutions including power failure
lighting, yesterday reported its financial results for the third quarter
2017.
Stewart Wallach, Capstone’s Chairman and CEO, commented, “As evidenced
by our third quarter results, the Companies’ branding and product
strategies continue to deliver. Our product placement earlier in the
year was strong resulting in five additional products finding retail
shelves. We have broken our quarterly revenue record for Q3 and have
surpassed our record 2016 revenues by over $2 million. Our product
development efforts remain laser focused on continuing to deliver new
and innovative products for 2018.”
Third Quarter Financial Summary
($ in thousands, except
per share data)
|
Q3 2017 |
Q3 2016 |
Change |
% Change |
||||||||||||
| Revenue | $ | 13,818 | $ | 11,692 | 2,126 | 18.1% | |||||||||
| Gross Profit | 3,110 | 2,851 | 259 | 9.1% | |||||||||||
| Gross Margin (%) | 22.5% | 24.4% | – | – | |||||||||||
| Operating Income | 1,450 | 1,604 | (154) | (9.6%) | |||||||||||
| Operating Margin (%) | 10.5% | 13.7% | – | – | |||||||||||
| Net Income Before Tax | 1,381 | 1,514 | (133) | (8.8%) | |||||||||||
| Net Income Before Tax (%) | 10.0% | 12.9% | – | – | |||||||||||
| Earnings Per Diluted Share | $ | 0.02 | $ | 0.03 | – | – | |||||||||
2017 First Nine Months Financial Summary
($ in thousands,
except per share data)
|
Q3 2017 |
Q3 2016 |
Change |
% Change |
||||||||||||
| Revenue | $ | 30,790 | $ | 22,673 | 8,117 | 35.8% | |||||||||
| Gross Profit | 7,333 | 5,593 | 1,740 | 31.1% | |||||||||||
| Gross Margin (%) | 23.8% | 24.7% | – | – | |||||||||||
| Operating Income | 3,176 | 2,724 | 452 | 16.6% | |||||||||||
| Operating Margin (%) | 10.3% | 12.01% | – | – | |||||||||||
| Net Income Before Tax | 3,063 | 2,510 | 553 | 22.0% | |||||||||||
| Net Income Before Tax (%) | 9.9% | 11.1% | – | – | |||||||||||
| Earnings Per Diluted Share | $ | .045 | $ | .051 | – | – | |||||||||
Record revenue growth in the third quarter of 2017 resulted from strong
demand for the Company’s battery powered accent lighting products and
the placement of 5 new lighting products. Products sold under Capstone
Lighting®, Hoover® Home LED and Duracell® brands
experienced significantly higher revenue levels.
Record gross profit was driven by the record revenue volume. Gross
margin as a percent to revenue declined slightly, when compared against
the prior year quarter, however that is after the Company invested an
additional $677 thousand in market promotional spending to support the
launch of the new products.
Selling and marketing expense increased to $928 thousand from $488
thousand in the prior year quarter. During the quarter we expensed $514
thousand of Royalty payments for the branded licenses, resulting from
the higher revenue levels.
Net Operating Income for the quarter 2017 and 2016 was $1.450 million
and $1.604 million, respectively. With a $390 thousand tax provision for
the quarter 2017 Net Income was $991 thousand compared to $1.490 million
in 2016.
Record revenue for the 9 months 2017 of $30.8 million was $8.1 million
or 35.8% higher than in 2016. Record gross profit for the 9 months 2017
of $7.3 million was $1.7 million or 31.1% higher than in 2016 and that
is after investing $1.8 million in product promotional allowances.
Record Operating Income for the 9 months 2017 of $3.2 million was $452
thousand higher than in 2016.
Net Income for the 9 months 2017 was $2.1 million or $331 thousand lower
than 2016, however that is after the Company provided for a tax
provision of $920 thousand or $883 thousand higher than 2016.
Webcast and Teleconference to Review Results and Outlook
The Company will host a live webcast and conference call on Thursday,
November 16, 2017 at 10:30 a.m. Eastern Time. During the call,
management will review the financial and operating results and discuss
the Company’s corporate strategy and outlook, followed by a
question-and-answer session. The conference call can be accessed by
dialing (201) 689-8562. The listen-only audio webcast can be monitored
at www.capstonecompaniesinc.com.
A telephonic replay will be available from 1:30 p.m. Eastern Time the
day of the teleconference until Tuesday, November 23, 2017. To listen to
the replay of the call, dial (844) 512-2921 and enter replay pin number
13671616. Alternatively, the archive of the webcast will be available on
the Company’s website at www.capstonecompaniesinc.com.
A transcript will also be posted to the website, once available.
About Capstone Companies, Inc.
Capstone Companies, Inc. is a public holding company that engages,
through its wholly-owned subsidiaries, Capstone Industries, Inc.,
Capstone Lighting Technologies, LLC, and Capstone International HK,
Ltd., in the development, manufacturing, logistics, and distribution of
consumer and institutional products, including the Hoover®
HOME LED lighting product line, to accounts throughout North
America and in international markets. See www.capstonecompaniesinc.com
for more information about the Company and www.capstoneindustries.com
for information on our current product offerings.
FORWARD-LOOKING STATEMENTS:
This news release contains “forward-looking statements” as that term
is defined in the Private Securities Litigation Reform Act of 1995, as
amended. Such statements consist of words like “anticipate,”
“expect,” “project,” “continue” and similar words. These
statements are based on the Company’s and its subsidiaries’ current
expectations and involve risks and uncertainties, which may cause
results to differ materially from those set forth in the forward-looking
statements. Factors that may cause actual results to differ
materially from those contemplated by such forward-looking statements,
include consumer acceptance of the Company’s products, its ability to
deliver new products, the success of its strategy to broaden market
channels and the relationships it has with retailers and distributors.
Prior success in operations does not necessarily mean success in
future operations. The ability of the Company to adequately and
affordably fund operations and any growth will be critical to achieving
and sustaining any expansion of markets and revenue. The
introduction of new products or the expanded availability of products
does not mean that the Company will enjoy better financial or business
performance. The risks associated with any investment in Capstone
Companies, Inc., which is a small business concern and a “penny-stock
Company” and, as such, a highly risky investment suitable for only those
who can afford to lose such investment, should be evaluated together
with the risks and uncertainties more fully described in the Company’s
Annual and Quarterly Reports filed with the Securities and Exchange
Commission. Capstone Companies, Inc. undertakes no obligation to
publicly update or revise any forward-looking statement, whether as a
result of new information, future events, or otherwise. Contents
of referenced URLs are not incorporated into this press release.
FINANCIAL TABLES FOLLOW. THE FOLLOWING SUMMARY FINANCIAL
STATEMENT SHOULD BE READ ALONG WITH THE FORM 10-K FINANCIAL STATEMENT
FILED BY THE COMPANY WITH THE SECURITIES AND EXCHANGE COMMISSION.
| CAPSTONE COMPANIES, INC. AND SUBSIDIARIES | ||||||||||||||||
| CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
| For the Three Months Ended | For the Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| Revenues, net | $ | 13,817,909 | $ | 11,692,146 | $ | 30,789,653 | $ | 22,672,551 | ||||||||
| Cost of sales | (10,707,657 | ) | (8,841,148 | ) | (23,457,070 | ) | (17,079,271 | ) | ||||||||
| Gross Profit | 3,110,252 | 2,850,998 | 7,332,583 | 5,593,280 | ||||||||||||
| Operating Expenses: | ||||||||||||||||
| Sales and marketing | 928,321 | 488,057 | 1,869,596 | 903,888 | ||||||||||||
| Compensation | 351,915 | 325,283 | 1,065,621 | 949,753 | ||||||||||||
| Professional fees | 109,257 | 111,339 | 429,440 | 286,681 | ||||||||||||
| Product development | 80,991 | 127,367 | 219,464 | 227,552 | ||||||||||||
| Other general and administrative | 189,780 | 195,046 | 572,461 | 501,458 | ||||||||||||
| Total Operating Expenses | 1,660,264 | 1,247,092 | 4,156,582 | 2,869,332 | ||||||||||||
| Net Operating Income | 1,449,988 | 1,603,906 | 3,176,001 | 2,723,948 | ||||||||||||
| Other Income (Expense): | ||||||||||||||||
| Interest Income | (12,945 | ) | 13,664 | – | 13,664 | |||||||||||
| Interest expense | (56,514 | ) | (103,363 | ) | (113,431 | ) | (227,522 | ) | ||||||||
| Total Other Income (Expense) | (69,459 | ) | (89,699 | ) | (113,431 | ) | (213,858 | ) | ||||||||
| Income Before Tax Provision | 1,380,529 | 1,514,207 | 3,062,570 | 2,510,090 | ||||||||||||
| Provision for Income Tax | (390,000 | ) | (24,412 | ) | (920,000 | ) | (37,012 | ) | ||||||||
| Net Income | $ | 990,529 | $ | 1,489,795 | $ | 2,142,570 | $ | 2,473,078 | ||||||||
| Net Income per Common Share | ||||||||||||||||
| Basic | $ | 0.021 | $ | 0.031 | $ | 0.046 | $ | 0.051 | ||||||||
| Diluted | $ | 0.021 | $ | 0.031 | $ | 0.045 | $ | 0.051 | ||||||||
| Weighted Average Common Shares Outstanding | ||||||||||||||||
| Basic | 46,660,456 | 48,132,664 | 46,989,940 | 48,132,664 | ||||||||||||
| Diluted | 47,152,574 | 48,371,158 | 47,462,664 | 48,320,017 | ||||||||||||
|
The accompanying notes are an integral part of these financial statements. |
||||||||||||||||
| CAPSTONE COMPANIES, INC. AND SUBSIDIARIES | ||||||||
| CONSOLIDATED BALANCE SHEETS | ||||||||
| September 30, | December 31, | |||||||
| 2017 | 2016 | |||||||
| (Unaudited) | ||||||||
| Assets: | ||||||||
| Current Assets: | ||||||||
| Cash | $ | 3,240,721 | $ | 1,646,128 | ||||
| Accounts receivable, net | 4,660,203 | 4,449,179 | ||||||
| Inventory | 142,065 | 366,330 | ||||||
| Prepaid expenses | 349,410 | 330,020 | ||||||
| Total Current Assets | 8,392,399 | 6,791,657 | ||||||
| Property and Equipment: | ||||||||
| Computer equipment and software | 19,767 | 19,767 | ||||||
| Machinery and equipment | 371,323 | 325,750 | ||||||
| Furniture and fixtures | 5,665 | 5,665 | ||||||
| Less: Accumulated depreciation | (304,176 | ) | (250,465 | ) | ||||
| Total Property & Equipment | 92,579 | 100,717 | ||||||
| Other Non-current Assets: | ||||||||
| Deposit | 13,616 | 12,193 | ||||||
| Note receivable | – | 526,887 | ||||||
| Goodwill | 1,936,020 | 1,936,020 | ||||||
| Total Other Non-current Assets | 1,949,636 | 2,475,100 | ||||||
| Total Assets | $ | 10,434,614 | $ | 9,367,474 | ||||
| Liabilities and Stockholders’ Equity: | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable and accrued liabilities | $ | 2,122,220 | $ | 2,678,210 | ||||
| Income tax payable | 404,088 | 1,588 | ||||||
| Notes and loans payable to related parties | 688,384 | 1,321,721 | ||||||
| Total Current Liabilities | 3,214,692 | 4,001,519 | ||||||
| Long Term Liabilities: | ||||||||
| Deferred tax liabilities | 362,000 | 216,000 | ||||||
| Total Long Term Liabilities | 362,000 | 216,000 | ||||||
| Total Liabilities | 3,576,692 | 4,217,519 | ||||||
| Commitments and Contingencies (Note 6) | ||||||||
| Stockholders’ Equity: | ||||||||
|
Preferred Stock, Series A, par value $.001 per share, authorized 6,666,667 shares, issued -0- shares |
– | – | ||||||
|
Preferred Stock, Series B-1, par value $.0001 per share, authorized 3,333,333 shares, issued -0- shares |
– | – | ||||||
|
Preferred Stock, Series C, par value $1.00 per share, authorized 67 shares, issued -0- shares |
– | – | ||||||
|
Common Stock, par value $.0001 per share, authorized 56,666,667 shares, issued 47,046,364 shares and 48,132,664 shares |
4,704 | 4,813 | ||||||
| Additional paid-in capital | 6,976,678 | 7,411,172 | ||||||
| Accumulated deficit | (123,460 | ) | (2,266,030 | ) | ||||
| Total Stockholders’ Equity | 6,857,922 | 5,149,955 | ||||||
| Total Liabilities and Stockholders’ Equity | $ | 10,434,614 | $ | 9,367,474 | ||||
|
The accompanying notes are an integral part of these financial statements. |
||||||||
| CAPSTONE COMPANIES, INC. AND SUBSIDIARIES | ||||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
| (Unaudited) | ||||||||
| For the Nine Months Ended | ||||||||
| September 30, | ||||||||
| 2017 | 2016 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net income | $ | 2,142,570 | $ | 2,473,078 | ||||
|
Adjustments necessary to reconcile net income to net cash provided by (used in) operating activities: |
||||||||
| Depreciation and amortization | 55,725 | 44,400 | ||||||
| Accrued interest on note receivable | 26,887 | (13,654 | ) | |||||
| Stock based compensation expense | 66,594 | 46,581 | ||||||
| Provision for deferred income tax | 146,000 | – | ||||||
| Accrued sales allowance | (831,731 | ) | (94,203 | ) | ||||
| (Increase) decrease in accounts receivable | 731,532 | (6,755,174 | ) | |||||
| (Increase) decrease in inventory | 224,265 | (275,049 | ) | |||||
| (Increase) decrease in prepaid expenses | (20,813 | ) | 43,764 | |||||
| Increase (decrease) in accounts payable and accrued liabilities | (263,912 | ) | 958,580 | |||||
| (Decrease) in accrued interest on notes payable | (135,337 | ) | (168,492 | ) | ||||
| Net cash provided by (used in) operating activities | 2,141,780 | (3,740,169 | ) | |||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Purchase of property and equipment | (47,587 | ) | (15,501 | ) | ||||
| Net cash (used in) investing activities | (47,587 | ) | (15,501 | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Proceeds from notes payable | 30,559,312 | 19,393,834 | ||||||
| Repayments of notes payable | (30,559,312 | ) | (15,049,345 | ) | ||||
| Repurchase of shares from Involve, LLC | (250,000 | ) | – | |||||
| Warrant issued | 7,500 | – | ||||||
| Proceeds from notes and loans payable to related parties | – | 860,000 | ||||||
| Repayments of notes and loans payable to related parties | (257,100 | ) | (1,453,946 | ) | ||||
| Net cash provided by (used in) financing activities | (499,600 | ) | 3,750,543 | |||||
| Net Increase (decrease) in Cash and Cash Equivalents | 1,594,593 | (5,127 | ) | |||||
| Cash and Cash Equivalents at Beginning of Period | 1,646,128 | 364,714 | ||||||
| Cash and Cash Equivalents at End of Period | $ | 3,240,721 | $ | 359,587 | ||||
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||||||||
| Cash paid during the period for: | ||||||||
| Interest | 221,881 | $ | 396,014 | |||||
| Income taxes | $ | 371,500 | $ | 31,912 | ||||
| Non-cash financing and investing activities: | ||||||||
| Sale of Investment for Note receivable | $ | – | $ | 500,000 | ||||
| Shares issued in satisfaction of loan payable to related party | $ | 240,900 | $ | – | ||||
|
The accompanying notes are an integral part of these financial statements. |
||||||||
Contacts
Capstone Companies, Inc.
Aimee Gaudet, 954-252-3440, ext. 313
Corporate
Secretary
