Capstone Companies, Inc. Revenue Increased 50% To A Record $11.7 Million

  • Second consecutive quarter of record breaking revenue
  • Operating income increased to a record $1.6 million
  • Earnings power demonstrated with record $1.5 million in net income
  • Expecting 2016 revenue growth of over 75% to nearly $30 million

DEERFIELD BEACH, Fla., Nov. 14, 2016 (GLOBE NEWSWIRE) -- Capstone Companies, Inc. (OTC:CAPC) ("Capstone" or the "Company"), a designer of innovative LED lighting solutions including power failure lighting, today reported its financial results for the third quarter 2016.

Stewart Wallach, Capstone's Chairman and CEO, commented, "We believe our performance this year has clearly substantiated that we have the right strategy, have successfully established a distinct niche in the home LED lighting space and have the talent and experience to execute well.  We have once again broken our quarterly revenue record on the back of our successful introduction of accent lighting products through the warehouse club channels.  Our product innovation, responsive and reliable customer service and strong brands have gained traction resulting in substantial revenue and earnings growth in the first nine months of 2016.

"We will continue to drive growth by developing new lighting products that incorporate previously unmet functionality while utilizing the efficiency of LED lighting.  We are starting to see a preliminary picture of what the first part of 2017 may look like for Capstone, and all indications at this point are for a first half of 2017 that outperforms our strong performance in the first half of 2016."  

Third Quarter Financial Summary ($ in thousands, except per share data)
  Q3 2016   Q3 2015   Change   % Change
U.S. revenue $ 11,396     $ 7,425       3,971       53 %
International revenue   297       323       (26 )     -8 %
Total revenue   11,692       7,747       3,945       51 %
Gross profit   2,851       1,980       871       44 %
Gross margin   24.4 %     25.6 %        
Operating income   1,604       1,359       245       18 %
Operating margin   13.7 %     17.5 %        
Net income $ 1,490     $ 1,247       242       19 %
Earnings per diluted share $ 0.03     $ 0.03       -       NM  
                               

Revenue growth in the third quarter of 2016 was primarily the result of strong demand for the Company's battery powered portable lighting products and wireless remote control products.  Products sold under both the Capstone Lighting and Hoover ® Home LED brands experienced significantly improved revenue.    

Increased gross profit was driven by strong revenue growth.  Gross margin as a percent of revenue declined due to significantly higher levels of promotional spending in the 2016 quarter, to support the introduction of new products, which reduced gross margin by approximately 5 percentage points when compared with the prior-year period.

Selling, general and administrative expenses (SG&A) increased to $1.2 million, from $0.6 million in the prior-year period on higher revenue.  SG&A as a percent of revenue increased to 10.7%, primarily due to higher sales and marketing expenses reflecting $221 thousand of royalty payments related to the Company's licensing of the Hoover ® brand name that did not occur in the third quarter of 2015.  As a result of these factors, operating income increased by 18% over the prior-year period to a record $1.6 million.

Net income increased to a record $1.5 million, or $0.03 per diluted share, in the third quarter of 2016. 

2016 First Nine Months Financial Summary ($ in thousands, except per share data)
  Q3 2016 YTD   Q3 2015 YTD   Change   % Change
U.S. revenue $ 20,826     $ 7,962     12,864     162 %
International revenue   1,847       789     1,058     134 %
Total revenue   22,673       8,751     13,922     159 %
Gross profit   5,594       2,341     3,253     139 %
Gross margin   24.7 %     26.7 %        
Operating income (loss)   2,724       357     2,367     663 %
Operating margin   12.0 %     4.1 %        
Net income (loss) $ 2,473     $ 151     2,322     1538 %
Earnings (loss) per diluted share $ 0.05     $ -     -     NM  
                           

Financial results for the first nine months 2016 improved significantly over the prior-year period, reflecting the successful introduction of new Capstone lighting products and the Hoover Home LED ® brand.  Improved operating and net margins are reflected in the operating leverage that the Company realized on higher sales levels.

Webcast and Teleconference to Review Results and Outlook

The Company will host a live webcast and conference call on Tuesday, November 15, 2016 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 22, 2016.  To listen to the replay of the call, dial (858) 384-5517 and enter replay pin number 13645717.  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 OPERATIONS    
  (Unaudited)  
                       
        For the Three Months Ended   For the Nine Months Ended  
        September 30,   September 30,  
          2016       2015       2016       2015    
                       
  Revenues, net     $ 11,692,146     $ 7,747,450     $ 22,672,551     $ 8,750,951    
  Cost of sales       (8,841,148 )     (5,767,306 )     (17,079,271 )     (6,410,197 )  
  Gross Profit       2,850,998       1,980,144       5,593,280       2,340,754    
  Gross margin       24.4 %     25.6 %     24.7 %     26.7 %  
                       
  Operating Expenses:                    
  Sales and marketing       488,057       16,716       903,888       185,229    
  Compensation       325,283       313,953       949,753       1,007,341    
  Professional fees       111,339       56,947       286,681       202,511    
  Product development       127,367       74,747       227,552       181,157    
  Other general and administrative       195,046       158,796       501,458       407,114    
  Total Operating Expenses       1,247,092       621,159       2,869,332       1,983,352    
                       
  Net Operating Income       1,603,906       1,358,985       2,723,948       357,402    
  Operating margin       13.7 %     17.5 %     12.0 %     4.1 %  
                       
  Other Income (Expense):                    
  Interest income       13,664       -       13,664       -    
  Interest expense       (103,363 )     (111,654 )     (227,522 )     (205,933 )  
  Total Other Income (Expense)       (89,699 )     (111,654 )     (213,858 )     (205,933 )  
                       
  Income Before Tax Provision       1,514,207       1,247,331       2,510,090       151,469    
                       
  Provision for Income Tax       (24,412 )     -       (37,012 )     -    
                       
  Net Income     $ 1,489,795     $ 1,247,331     $ 2,473,078     $ 151,469    
                       
  Net Income per Common Share                    
  Basic     $ 0.031     $ 0.026     $ 0.051     $ 0.003    
  Diluted     $ 0.031     $ 0.026     $ 0.051     $ 0.003    
                       
  Weighted Average Common Shares Outstanding                        
  Basic       48,132,664       48,132,664       48,132,664       46,057,590    
  Diluted       48,371,158       48,132,664       48,320,017       46,057,590    
                       

 
  CAPSTONE COMPANIES, INC. AND SUBSIDIARIES  
  CONSOLIDATED BALANCE SHEETS  
     
    September 30,   December 31,  
      2016       2015    
    (Unaudited)      
  Assets:        
  Current Assets:        
  Cash $ 359,587     $ 364,714    
  Accounts receivable, net   11,832,358       5,077,182    
  Inventory   480,758       205,708    
  Prepaid expenses   522,694       566,459    
  Total Current Assets     13,195,397         6,214,063    
           
  Fixed Assets:        
  Computer equipment and software   19,767       19,767    
  Machinery and equipment   396,133       380,633    
  Furniture and fixtures   5,665       5,665    
  Less: Accumulated depreciation   (339,579 )     (295,180 )  
  Total Fixed Assets     81,986         110,885    
           
  Other Non-current Assets:        
  Deposit   12,193       12,193    
  Investment (AC Kinetics)   -       500,000    
  Note receivable   513,654       -    
  Goodwill   1,936,020       1,936,020    
  Total Other Non-current Assets   2,461,867       2,448,213    
  Total Assets $     15,739,250     $     8,773,161    
           
  Liabilities and Stockholders' Equity:        
  Current Liabilities:        
  Accounts payable and accrued liabilities $ 3,023,561     $ 2,164,283    
  Income tax payable   12,600       7,500    
  Note payable - Sterling National Bank   6,620,023       2,275,534    
  Notes and loans payable to related parties   1,301,596       2,064,034    
  Total Current Liabilities   10,957,780       6,511,351    
           
  Commitments and Contingent Liabilities (Note 5):        
  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 48,132,664 shares   4,813       4,813    
  Additional paid-in capital   7,390,697       7,344,115    
  Accumulated deficit   (2,614,040 )     (5,087,118 )  
  Total Stockholders' Equity   4,781,470       2,261,810    
  Total Liabilities and Stockholders' Equity $     15,739,250     $     8,773,161    
           

 
  CAPSTONE COMPANIES, INC. AND SUBSIDIARIES
  CONSOLIDATED STATEMENTS OF CASH FLOWS  
  (Unaudited)
           
      For the Nine Months Ended
      September 30,
        2016       2015  
  CASH FLOWS FROM OPERATING ACTIVITIES:        
           
  Net Income   $ 2,473,078     $ 151,469  
  Adjustments necessary to reconcile net income to net cash (used in)  operating activities:        
  Depreciation and amortization     44,400       49,311  
  Accrued interest on note receivable     (13,654 )     -  
  Stock based compensation expense     46,581       81,219  
  Accrued sales allowance     (94,203 )     (196,978 )
  (Increase) decrease in accounts receivable     (6,755,174 )     (6,376,672 )
  (Increase) decrease in inventory     (275,049 )     38,337  
  (Increase) decrease in prepaid expenses     43,764       (371,317 )
  (Increase) decrease in other assets     -       14,456  
  Increase (decrease) in accounts payable and accrued liabilities     958,580       1,167,729  
  Increase (decrease) in accrued interest on notes payable     (168,492 )     148,385  
  Net cash (used in) operating activities     (3,740,169 )     (5,294,061 )
           
  CASH FLOWS FROM INVESTING ACTIVITIES:        
  Purchase of property and equipment     (15,501 )     (58,194 )
  Net cash (used in) investing activities       (15,501 )       (58,194 )
           
  CASH FLOWS FROM FINANCING ACTIVITIES:        
  Proceeds from notes payable     19,393,834       5,791,914  
  Repayments of notes payable     (15,049,345 )     (1,895,194 )
  Proceeds from notes and loans payable to related parties     860,000       2,500,000  
  Repayments of notes and loans payable to related parties     (1,453,946 )     (1,100,000 )
  Net cash provided by financing activities     3,750,543       5,296,720  
           
  Net (Decrease) in Cash and Cash Equivalents     (5,127 )     (55,535 )
  Cash and Cash Equivalents at Beginning of Period     364,714       313,856  
  Cash and Cash Equivalents at End of Period   $     359,587     $     258,321  
           
  SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:        
  Cash paid during the period for:        
  Interest   $ 396,014     $ 57,549  
  Income taxes   $ 31,912     $ -  
      $     427,926     $     57,549  
  Non-cash financing and investing activities:        
  Conversion of Series C Preferred Stock to Common Stock   $ -     $ 1,000  
           
  Sale of Investment for Note receivable   $ 500,000     $ -  
           
For more information, contactCompany:  Aimee GaudetCorporate Secretary(954) 252-3440, ext. 313Investor Relations: Kei Advisors LLC Deborah K. Pawlowski / Garett K. Gough (716) 843-3908 / (716) 846-1352 dpawlowski@keiadvisors.com / ggough@keiadvisors.com

Primary Logo