Executive Summary

Q2 2022 net sales were $5.38M, down 30.7% year-over-year vs. reported Q2 2021 net sales of $7.77M, and down 7.0% sequentially from Q1 2022’s $5.79M; comparable “same brand” net sales declined to $5.4M vs. $6.5M in Q2 2021 due to portfolio actions and distribution changes .
Diluted EPS from continuing operations was $(0.34), deteriorating from $(0.08) in Q2 2021 and $(0.04) in Q1 2022; GAAP net loss widened to $(4.33)M, driven by a $3.59M impairment tied to Kids N Pets and Messy Pet .
Gross margin compressed to ~42.3% in Q2 (vs. ~50.7% in Q1 and ~40.0% in Q2 2021), reflecting inflationary pressures and supply chain impacts; management highlighted ongoing cost-structure optimization despite headwinds .
No formal guidance was provided; near-term stock reaction catalysts include impairment charges, China distributor termination, and continued supply chain constraints impacting BIZ powder boosters .

What Went Well and What Went Wrong

What Went Well

Adjusted net loss from operations held steady at ~$0.6M in Q2 2022 vs. Q2 2021, despite lower sales, indicating cost-structure improvements offset headwinds .
Positive operating cash flow of ~$0.47M year-to-date through Q2, reflecting working capital management and cost actions (“Generated operating cash flow of $0.5M”) .
Management is actively optimizing production/logistics and reducing overhead: “We have reduced overhead and continue to optimize and simplify our production and logistics networks” (President Tisha Pedrazzini) .

What Went Wrong

Top-line pressure from portfolio/distribution changes and supply chain challenges: net sales fell to $5.38M; sale of Dryel and end of Batiste distribution contributed to decline; BIZ powder boosters constrained .
Material non-cash impairment ($3.59M) to goodwill/intangibles for Kids N Pets and Messy Pet drove GAAP loss to $(4.33)M .
International weakness: Alpha Skin Care destined for China declined; post-quarter the company terminated its exclusive China distributor to reset go-to-market .

Financial Results

Metric	Q2 2021	Q1 2022	Q2 2022
Net Sales ($USD Millions)	$7.77	$5.79	$5.38
Gross Profit ($USD Millions)	$3.11	$2.93	$2.28
Gross Margin %	40.0% (3.11/7.77)	50.7% (2.93/5.79)	42.3% (2.28/5.38)
Loss from Operations ($USD Millions)	$(1.44)	$(0.30)	$(4.15)
Net Loss ($USD Millions)	$(1.07)	$(0.45)	$(4.33)
Diluted EPS – Continuing Ops ($USD)	$(0.08)	$(0.04)	$(0.34)
Operating Cash Flow ($USD Millions, YTD)	N/A	$0.35	$0.47

Notes:

“Same brand” Q2 2022 net sales: $5.4M vs. $6.5M in Q2 2021; Q2 2022 decline also tied to BIZ powder booster supply chain and China Alpha Skin Care weakness .
Q2 2022 GAAP net loss reflects $3.59M impairment of goodwill/intangibles; Q2 2021 included $0.8M restructuring costs; adjusted net loss from operations ~$0.6M in both Q2 periods .

Segment/brand insights (qualitative):

BIZ powder booster: sales declined due to supply chain disruptions .
Alpha Skin Care: sales to China declined; distributor terminated post-quarter .
Kids N Pets and Messy Pet: impairment recorded in Q2 .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	FY/Quarter	None provided	None provided	Maintained: No formal guidance
Margins	FY/Quarter	None provided	None provided	Maintained: No formal guidance
OpEx	FY/Quarter	None provided	None provided	Maintained: No formal guidance
EPS/Net Income	FY/Quarter	None provided	None provided	Maintained: No formal guidance
Taxes/Other	FY/Quarter	None provided	None provided	Maintained: No formal guidance

Earnings Call Themes & Trends

No earnings call transcript was available for Q2 2022 in our document catalog, and a targeted search did not yield a transcript; themes below reflect management commentary from press releases over the last three quarters .

Topic	Previous Mentions (Q4 2021)	Previous Mentions (Q1 2022)	Current Period (Q2 2022)	Trend
Supply chain/logistics	“Supply chain disruptions and shipping delays” increased logistics costs	BIZ powder booster supply chain issues; inflation and fuel costs impacting transportation rates	Continued shortages in select products; BIZ powder boosters remain challenged	Persistent headwind
Inflation	Rising manufacturing/distribution costs	Inflation impacting operating costs and logistics	Inflation remains a headwind; cost optimization underway	Ongoing pressure with mitigation efforts
Portfolio optimization	Sale of Dryel to reduce net debt; evaluating brand portfolio	Early line extensions on Amazon; focus on highest-potential brands	Impairment of Kids N Pets/Messy Pet; concluded Batiste distribution	Active portfolio reshaping
China/International	Not highlighted	China lockdowns reduced Alpha Skin Care exports	Terminated exclusive China distributor; new go-to-market approach	Reset strategy
Product performance	Mixed brand performance (Alpha, Denorex up; others down)	Kids N Pets/Messy Pet slight increase; BIZ down	BIZ down; Alpha China down	Mixed, with notable pressure
Technology/AI	Not discussed	Not discussed	Not discussed	Not applicable

Management Commentary

“Despite a challenging operating environment, we remain committed to maximizing our value proposition for consumers across our entire portfolio of brands… We have reduced overhead and continue to optimize and simplify our production and logistics networks.” – President Tisha Pedrazzini (Q2 press release) .
“While inflation continues to impact operating costs and supply chain remains uncertain, we’ve launched new line extensions… We continue to focus on both sales growth initiatives and cost structure efficiencies to drive profit improvements in the short and long term.” – President Tisha Pedrazzini (Q1 press release) .
“We… made progress in reducing overhead expenses and simplifying our supply chain and 3PL networks… sale of the Dryel brand, the proceeds of which we used to reduce net debt.” – Management and Board commentary (2021 results) .

Q&A Highlights

No Q2 2022 earnings call transcript was found; there were no Q&A disclosures available in our document catalog or search results for SLGD .

Estimates Context

S&P Global consensus EPS and revenue estimates for Q2 2022 were unavailable due to missing CIQ mapping for SLGD; therefore, comparisons to Wall Street consensus could not be performed. Values retrieved from S&P Global were unavailable due to mapping limitations.
Implications: Given GAAP loss driven by non-cash impairments and continued supply chain/inflationary impacts, we expect sell-side models to reassess near-term profitability trajectory and incorporate China channel changes and brand portfolio resets .

Key Takeaways for Investors

Top-line softness reflects deliberate portfolio/distribution changes (Dryel sale, Batiste distribution end) and operational constraints (BIZ powder booster supply chain), with Q2 net sales at $5.38M and “same brand” sales at $5.4M .
Cost actions are evident: adjusted net loss from operations steady at ~~$0.6M despite lower sales, and positive operating cash flow YTD through Q2 (~~$0.47M), indicating progress on overhead/logistics optimization .
A $3.59M impairment (Kids N Pets/Messy Pet) weighed on GAAP EPS; monitor further portfolio moves and intangible assessments as management continues to reshape the brand mix .
China strategy reset (distributor termination, new go-to-market) introduces execution risk but could improve control and alignment; watch Alpha Skin Care demand recovery and channel rebuild .
Near-term trading setup: headline GAAP loss and lack of guidance may keep sentiment cautious; potential catalysts include supply chain normalization in BIZ boosters and evidence of margin stabilization from cost actions .
Medium-term thesis: If overhead/logistics optimization and brand-focus strategy sustain adjusted profitability and cash generation, SLGD could rebase margins even at lower revenue levels; international channel rebuild remains a swing factor .

Scott's Liquid Gold - Inc. (SLGD)·Q2 2022 Earnings Summary