Mace Security International Reports Fourth Quarter and Full-Year 2016 Financial Results

• Third consecutive positive net income quarter
• Added several new accounts during the quarter and over Seventy for the full year
• Margin improvement spurred by automation, production efficiencies, and cost reductions
• Pending acquisition expected to increase revenues over 20% and improve overall margins
• Mace shares recently up-listed to OTCQX Best Market

CLEVELAND--(BUSINESS WIRE)--Mace Security International Inc. (OTCQX: MACE) today released audited financial results for the year ended December 31, 2016.

Fourth Quarter/ Full-Year 2016 Financial Highlights

• Net revenue up 9.1% for quarter; up 26.7% full-year
• Gross profit up 19.0% for quarter; up 33.8% full-year
• Key channels of distribution (sporting goods and consumer) net revenues up 22.0% for the quarter; up 29.4% year-to-date
• Net income of $120,000, up $570,000 for the quarter; $250,000 for the year, up $1,277,000
• EBITDA of $138,000, up $583,000 for the quarter; $317,000 for the year, up $1,332,000

Select Consolidated Financial Results, Fourth Quarter Ended December 31, 2016 and 2015
(in thousands):
	Dec 31,			% of Sales		Dec 31,			% of Sales
	2016					2015					$ Chg
Net revenue	$	2,238				$	2,051				$	187
Gross profit		863		38.6	%		725		37.5	%		138
Selling, general, and administrative expenses		947		42.3	%		1,022		49.8	%		75
Operating loss		(123	)	-5.5	%		(330	)	-16.1	%		207
Net income (loss)		120		5.4	%		(450	)	-21.9	%		570

Fourth Quarter 2016 Operational Highlights

The Company experienced a 22% increase in net sales through its sporting goods and consumer sales channels in the fourth quarter. “We experienced significant sales growth within some key accounts plus the Company continues to add more accounts every quarter,” said Mace President and CEO John J. McCann. Gross profit margins for the quarter improved significantly through investments in automation and package redesign that reduced material costs and improved productivity, while also reducing direct labor. During the fourth quarter, Mace completed the sale of its Surveillance business resulting in a $212,000 gain.

The above achievements contributed to Mace reporting net income for the third consecutive quarter and net profit for all of 2016. “Our plan continues to be to grow sales, gain market share, control expenses, and further increase margins through cost reductions and improved productivity,” Mr. McCann added.

Subsequent Events

On January 19, 2017 Mace announced it entered into an agreement in principle to acquire all of the assets, rights and properties of Washington Labs, LLC, a producer of high quality defense spray products for an undisclosed amount of cash and stock. Upon closing, the transaction will make Mace one of the largest manufacturers and producers of less lethal defense sprays in the world. The company now expects the transaction to close by March 31, 2017. “We look forward to integrating a business that perfectly complements Mace, adding EPA approved formulations, a portfolio of best-in-class products, and increased automation in the production process.” said Mr. McCann.

Also on February 16, 2017, the Company enhanced its stock by listing to trade on the OTCQX Best Market.

Chairman’s Letter on Mace.com Website

“I am pleased to see the Company continue to execute its business plan, and posting another quarter of income and increased sales,” said Richard Barone, Chairman.

Investors and interested parties are invited to read a letter from the Company’s Chairman, Richard Barone. The letter can be found on the Company’s website, http://corp.mace.com/investor-relations/ under financial reports and information.

Conference Call

Mace® will conduct a conference call on Wednesday, March 1, 2017 at 2:00 PM EDT, 11:00 AM PDT to discuss its financial and operational performance for the quarter and year ended December 31, 2016. The participant conference call number is [phone], conference ID: 79653569. A full set of the audited consolidated financial statements are available on the Mace website. Presentation materials for the conference call will be available Wednesday, March 1, on Mace’s website under Investor Relations, Shareholder Transcripts & Presentations. A digital recording of the teleconference will be available on the Mace website within 24 hours of the teleconference.

About Mace Security International, Inc.

Mace Security International Inc. is a globally recognized leader in personal safety and security. Based in Cleveland, Ohio, the Company has spent more than 40 years designing, manufacturing, and distributing consumer and tactical products for personal defense and security under its world-renowned Mace^® Brand – the original trusted brand of pepper spray products. The Company also offers aerosol defense sprays and tactical products for law enforcement and security professionals worldwide through its Mace^® and Take Down^® brands.

Mace Security International distributes and supports Mace^® Brand products and services through mass-market retailers, wholesale distributors, independent dealers, e-commerce marketers and installation service providers. For more information, please visit www.mace.com.

Forward-Looking Statements

Certain statements and information included in this press release constitute “forward-looking statements” within the meaning of the Federal Private Securities Litigation Reform Act of 1995. When used in this press release, the words or phrases “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimate,” “projected,” “intend to” or similar expressions are intended to identify “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to certain risks, known and unknown, and uncertainties, including but not limited to economic conditions, dependence on management, our ability to compete with competitors, dilution to shareholders, and limited capital resources.

Mace Security International, Inc.
Condensed Consolidated Balance Sheets
(Audited)
(Amounts in thousands)
ASSETS	December 31, 2016		December 31, 2015
Current assets:
Cash and cash equivalents	$	970	$	446
Restricted cash		60		60
Short-term investments		1,794		2,142
Accounts receivable, net		1,655		1,562
Inventories, net		1,568		1,601
Prepaid expenses and other current assets		952		779
Assets held for sale, net		-		430
Total current assets		6,999		7,020
Plant and equipment, net		714		522
Other intangible assets		685		685
Other assets		1,184		1,034
Total assets	$	9,582	$	9,261
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	194	$	222
Income taxes payable		60		61
Accrued expenses and other current liabilities		518		695
Total current liabilities		772		978
Other liabilities		4		-
Total stockholders’ equity		8,806		8,283
Total liabilities and stockholders’ equity	$	9,582	$	9,261

Mace Security International, Inc.
Condensed Consolidated Statements of Operations
Three Months Ended December 31, 2016 and 2015
(Amounts in thousands)
	Three Months Ended December 31,
	2016			2015
Net revenue	$	2,238		$	2,051
Cost of revenue		1,375			1,326
Gross profit		863			725
Selling, general, and administrative expenses		947			1,022
Depreciation		39			33
Operating loss		(123	)		(330	)
Interest expense		(13	)		(13	)
Interest income		34			41
Loss on sale of short-term investments		(15	)		(2	)
Other income (expense), net		(4	)		(16	)
Loss from continuing operations before income tax provision		(121	)		(320	)
Income tax (benefit) provision		(19	)		1
Loss from continuing operations		(102	)		(321	)
Income (loss) from discontinued operations, net of tax		222			(129	)
Net income (loss)	$	120		$	(450	)

Mace Security International, Inc.
Condensed Consolidated Statements of Operations
Years Ended December 31, 2016 and 2015
(Audited)
(Amounts in thousands)
	Years Ended December 31,
	2016			2015
Net revenue	$	9,054		$	7,145
Cost of revenue		5,369			4,390
Gross profit		3,685			2,755
Selling, general, and administrative expenses		3,719			3,838
Depreciation		155			140
Operating loss		(189	)		(1,223	)
Interest expense		(48	)		(51	)
Interest income		136			179
Loss on sale of short-term investments		(15	)		(21	)
Other income		(4	)		296
Loss from continuing operations before income tax provision		(120	)		(820	)
Income tax (benefit) provision		(19	)		1
Loss from continuing operations		(101	)		(821	)
Income (loss) from discontinued operations, net of tax		351			(206	)
Net income (loss)	$	250		$	(1,027	)