OurPet's Company Reports Third Quarter 2015 Results
Record Q3 Net Revenue of Nearly $6.0 Million -- Net Income Increases 428% to $410,450
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E-mailFAIRPORT HARBOR, OH -- (Marketwired) -- 11/02/15 -- OurPet's Company (OTCQX: OPCO) (www.ourpets.com), a leading proprietary pet supply company, today reported record third-quarter revenue of $5.99 million, an increase of 7% from $5.60 million in revenues for the comparable three months of 2014. Net income for the third quarter ended September 30, 2015, increased 428% to $410,450, or $0.02 diluted earnings per share, compared to $77,751, or $0.00, for the year prior.
Dr. Steven Tsengas, President and CEO, commented, "We are pleased with our results for the third quarter in which we achieved record net revenue, gross margins improving to 34%, and net income from operations of almost 11% of sales. We continue to see strong sales growth in the Pet Specialty channel driven by our cat toys and bowls/feeder lines. E-commerce sales rebounded and grew 7% while the Food, Drug, Mass channel slightly decreased; however, we anticipate improved sales as the conversion to the PetZone brand is completed by year end. Unfortunately, with the strengthening of the U.S. dollar, international sales have been negatively impacted particularly in Canada and the United Kingdom."
Dr. Tsengas continued, "We have expanded and strengthened our relationship with several domestic and international independent sales representative organizations, and have added another experienced salesperson to our staff. With the recent and anticipated introduction of a significant number of new innovative products in all our product categories, we are experiencing robust sales activity. Our Catty Whack™, winner of the SuperZoo 'Best New Cat Product' award, is beginning to ship and is receiving strong consumer reaction. We expect to release more information on other major, trend-setting products over the next six months.
"As we have previously communicated, the last five years have been challenging for OurPet's as we have transitioned from a small- to a medium-sized company poised for accelerated future growth in both revenue and net income. This required large investments in management/operating informational systems; strengthening and, where appropriate, adding management and professional/technical talent; improving warehousing and inventory management efficiencies; strengthening relationships of strategic domestic and overseas suppliers; and strengthening our relationship with our banking resources. We sincerely believe that these improvements will positively impact revenue and profit results going into the fourth quarter of 2015 and beyond."
2015 Third Quarter Results
Net revenue increased 7% to $5,986,645 for the 2015 third quarter versus the same period last year. The $386,000 increase was attributable to strong sales in the Pet Specialty and Value channels, partially offset by a decrease in the Food, Drug and Mass channel.
Gross Profit was $2,012,177 for the 2015 third quarter compared to $1,640,751 the prior year. Gross profit margin increased 4.3 percentage points to 33.6% for the 2015 third quarter from 29.3% for the same period a year ago due to continuous improvement initiatives, price increases, and product mix.
Income from operations increased to $649,023 for the 2015 third quarter from $152,768 a year ago. This increase was primarily due to higher gross profit and also benefited from lower selling, general, and administrative expenses.
Other income for the 2015 third quarter increased to $14,582 from $6,051 a year ago due to a higher amount of patent infringement settlements.
Income before taxes was almost five times greater at $627,686 for the 2015 third quarter compared to $127,666 a year ago.
Income tax expense for the 2015 third quarter increased to $217,236 from $49,915 a year ago due to the higher income.
Net income increased to $410,450 for the 2015 third quarter from $77,751 last year. Net income per diluted share increased to $0.02 for the third quarter of 2015 from $0.00 a year ago.
EBITDA was $825,696 for the 2015 third quarter versus $323,140 a year ago. A reconciliation of EBITDA to GAAP net income is provided in an attachment to the summary financial statements.
2015 First Nine Months Results
Net revenue increased 6% to $17,170,795 for the first nine months of 2015. The year-over-year increase was due to strong Pet Specialty sales, especially in the bowls and feeders category.
Gross profit increased 15% to $5,424,591 for the first nine months of 2015 versus the prior year. Gross profit margin increased 2.5 percentage points to 31.6% for the first nine months of 2015 from 29.1% the prior year due to the same factors that benefited the 2015 third quarter results.
Income from operations increased 143% to $1,427,797 for the first nine months of 2015, which was attributable to higher gross profit and lower selling, general, and administrative expenses.
Other income decreased to $40,582 for the first nine months of 2015 from $77,713 for the same period last year due to a greater amount of patent infringement settlements in 2014.
Income before taxes increased to $1,383,158 for the first nine months of 2015 compared to $566,658 for the same period a year ago.
Income tax expense was $496,839 for the first nine months of 2015 compared to $206,723 the prior year.
Net income for the first nine months of 2015 increased 146% to $886,319 from $359,935 for the same period in 2014. Net income per share increased to $0.04 for the first nine months of 2015 from $0.02 last year.
EBITDA increased 72% to $1,984,688 the first nine months of 2015 compared to $1,153,656 the prior year. A reconciliation of EBITDA to GAAP Net Income is provided in an attachment to the summary financial statements.
The Current Ratio improved to 5.61, reflecting or strong liquidity, while Stockholders’ Equity improved by $904,319 or 12.1% over the comparable date last year.
About OurPet's Company
OurPet's Company designs, produces and markets a broad line of innovative, high-quality accessory and consumable pet products in the U.S. and overseas. Investors and customers may visit www.ourpets.com for more information about our company and its products. OurPet’s websites include www.petzonebrand.com and www.ourpets.com.
Forward-Looking Statements
Certain of the matters set forth in this press release are forward-looking and involve a number of risks and uncertainties. Among the factors that could cause actual results to differ materially are the following: business conditions; growth in the industry; general economic conditions; addition or loss of significant customers; the loss of key personnel; product development; competition; risks of doing business abroad; foreign government regulations; fluctuations in foreign currency rates; rising costs for raw materials and sources of supply that may be limited or unavailable from time to time; the timing of orders booked; and the other risks that are described from time to time in OurPet's SEC reports.
OURPET'S COMPANY AND SUBSIDIARIES
CONSOLIDATED OPERATING RESULTS
For the Three Months For the Nine Months
Ended Ended
September 30, September 30,
------------------------- -------------------------
2015 2014 2015 2014
------------------------- -------------------------
Net revenue $ 5,986,645 $ 5,601,011 $17,170,795 $16,175,692
Cost of goods sold 3,974,468 3,960,260 11,746,204 11,462,593
------------ ------------ ------------ ------------
Gross profit on
sales 2,012,177 1,640,751 5,424,591 4,713,099
Selling, general and
administrative expenses 1,363,154 1,487,983 3,996,794 4,126,635
------------ ------------ ------------ ------------
Income from
operations 649,023 152,768 1,427,797 586,464
Other (income) and
expense, net (14,582) (6,051) (40,582) (77,713)
Interest expense 35,919 31,153 85,221 97,519
------------ ------------ ------------ ------------
Income before taxes 627,686 127,666 1,383,158 566,658
Income Tax expense 217,236 49,915 496,839 206,723
------------ ------------ ------------ ------------
Net Income $ 410,450 $ 77,751 $ 886,319 $ 359,935
============ ============ ============ ============
Basic and Diluted Net
Income Per Common
Share After Dividend
Requirements For
Preferred Stock $ 0.02 $ 0.00 $ 0.04 $ 0.02
============ ============ ============ ============
Weighted average number
of common shares
outstanding used to
calculate basic
earnings per share 17,562,239 17,056,910 17,558,085 16,884,581
============ ============ ============ ============
Weighted average number
of common and
equivalent shares
outstanding used to
calculate diluted
earnings per share 19,824,793 18,037,565 19,220,115 18,160,977
============ ============ ============ ============
OURPET'S COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
September 30, December 31,
2015 2014
---------------- ----------------
ASSETS
Cash and equivalents $ 101,775 $ 192,448
Receivables, net 4,048,759 3,116,448
Inventories, net 7,802,675 6,894,115
Prepaid expenses 467,126 478,593
---------------- ----------------
Total current assets 12,420,335 10,681,604
LONG TERM ASSETS
Property and equipment, net 1,867,252 1,769,548
Amortizable intangible assets, net 361,259 384,063
Non amortizable Intangible Assets 461,000 461,000
Goodwill 67,511 67,511
Deposits and Other assets 18,003 18,003
---------------- ----------------
Total long term assets 2,775,025 2,700,125
Total assets $ 15,195,360 $ 13,381,729
================ ================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current maturities of long-term debt 311,470 601,632
Accounts payable 1,244,885 1,489,982
Accrued expenses 656,652 565,491
---------------- ----------------
Total current liabilities 2,213,007 2,657,105
LONG TERM LIABILITIES
Long-term debt - less current portion
above 938,894 119,780
Revolving line of credit 3,473,032 2,862,032
Deferred income taxes 204,947 281,651
---------------- ----------------
Total long term liabilities 4,616,873 3,263,463
Total liabilities 6,829,880 5,920,568
---------------- ----------------
Stockholders' Equity 8,365,480 7,461,161
---------------- ----------------
Total liabilities and stockholders'
equity $ 15,195,360 $ 13,381,729
================ ================
OURPET'S COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, December 31,
2015 2014
---------------- ----------------
Unaudited
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 101,775 $ 192,448
Accounts receivable - trade, less
allowance for doubtful accounts of
$37,824 and $39,539 4,048,759 3,116,448
Inventories net of reserve 7,802,675 6,894,115
Prepaid expenses 467,126 478,593
---------------- ----------------
Total current assets 12,420,335 10,681,604
---------------- ----------------
PROPERTY AND EQUIPMENT
Computers and office equipment 1,020,239 883,163
Warehouse equipment 585,815 567,816
Leasehold improvements 289,217 276,952
Tooling 4,207,203 3,885,401
Construction in progress 222,573 157,031
---------------- ----------------
Total 6,325,047 5,770,363
Less accumulated depreciation 4,457,795 4,000,815
---------------- ----------------
Net property and equipment 1,867,252 1,769,548
---------------- ----------------
OTHER ASSETS
Amortizable Intangible Assets, less
amortization of $476,677 and $417,349 361,259 384,063
Intangible Assets 461,000 461,000
Goodwill 67,511 67,511
Deposits and other assets 18,003 18,003
---------------- ----------------
Total other assets 907,773 930,577
---------------- ----------------
Total assets $ 15,195,360 $ 13,381,729
================ ================
The accompanying notes are an integral part of the condensed consolidated financial statements.
OURPET'S COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)
September 30, December 31,
2015 2014
---------------- ----------------
Unaudited
LIABILITIES
CURRENT LIABILITIES
Current maturities of long-term debt 311,470 601,632
Accounts payable - trade 1,244,885 1,489,982
Other accrued expenses 656,652 565,491
---------------- ----------------
Total current liabilities 2,213,007 2,657,105
---------------- ----------------
LONG-TERM LIABILITIES
Long-term debt - less current portion
above 938,894 119,780
Revolving Line of Credit 3,473,032 2,862,032
Deferred Income Taxes 204,947 281,651
---------------- ----------------
Total long term liabilities 4,616,873 3,263,463
Total liabilities 6,829,880 5,920,568
---------------- ----------------
STOCKHOLDERS' EQUITY
COMMON STOCK,
no par value; 50,000,000 shares
authorized, 17,562,239 and 16,657,660
shares issued and outstanding at
September 30, 2015 and December 31,
2014 respectively 5,031,766 5,031,766
CONVERTIBLE PREFERRED STOCK,
no par value; convertible into Common
Stock at the rate of 10 common shares
for each preferred share; 4,825,000
shares authorized, 63,500 shares issued
and outstanding at September 30, 2015
and December 31, 2014 579,850 579,850
Series 2009 no par value; convertible
into Common Stock at the rate of 10
common shares for each preferred share;
175,000 shares authorized, 123,616
shares issued and outstanding at
September 30, 2015 and December 31,
2014 865,312 865,312
PAID-IN CAPITAL 71,307 53,307
ACCUMULATED EARNINGS 1,817,245 930,926
---------------- ----------------
Total stockholders' equity 8,365,480 7,461,161
---------------- ----------------
Total liabilities and stockholders'
equity $ 15,195,360 $ 13,381,729
================ ================
The accompanying notes are an integral part of the consolidated financial statements.
OURPETS COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
2015 2014 2015 2014
------------------------- -------------------------
Net revenue $ 5,986,645 $ 5,601,011 $17,170,795 $16,175,692
Cost of goods sold 3,974,468 3,960,260 11,746,204 11,462,593
------------------------- -------------------------
Gross profit on sales 2,012,177 1,640,751 5,424,591 4,713,099
Selling, general and
administrative expenses 1,363,154 1,487,983 3,996,794 4,126,635
------------------------- -------------------------
Income from operations 649,023 152,768 1,427,797 586,464
Other income (14,582) (6,051) (40,582) (77,713)
Interest expense 35,919 31,153 85,221 97,519
------------------------- -------------------------
Income before income
taxes 627,686 127,666 1,383,158 566,658
Income tax expense 217,236 49,915 496,839 206,723
------------------------- -------------------------
Net income $ 410,450 $ 77,751 $ 886,319 $ 359,935
========================= =========================
Basic and Diluted
Earnings Per Common
Share After Dividend
Requirements For
Preferred Stock:
Net Income $ 0.02 $ 0.00 $ 0.04 $ 0.02
========================= =========================
Weighted average number
of common shares
outstanding used to
calculate basic
earnings per share 17,562,239 17,056,910 17,558,085 16,884,581
========================= =========================
Weighted average number
of common and
equivalent shares
outstanding used to
calculate diluted
earnings per share 19,824,793 18,037,565 19,220,115 18,160,977
========================= =========================
The accompanying notes are an integral part of the consolidated financial statements.
OURPET'S COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (Unaudited)
FOR THE NINE MONTHS ENDED September 30, 2015
Series 2009 Preferred
Preferred Stock Stock
-------------------------- --------------------------
Number of Number of
Shares Amount Shares Amount
------------ ------------- ------------ -------------
Balance at December
31, 2014 63,500 $ 579,850 123,616 $ 865,312
Common Stock issued
upon exercise of
stock options - - - -
Net income - - - -
Stock-Based
compensation expense - - - -
------------ ------------- ------------ -------------
Balance at September
30, 2015 (unaudited) 63,500 $ 579,850 123,616 $ 865,312
Common Stock
--------------------------
Number of
Shares Amount
------------ -------------
Balance at December
31, 2014 17,553,007 $ 5,031,766
Common Stock issued
upon exercise of
stock options 9,232 -
Net income - -
Stock-Based
compensation expense - -
------------ -------------
Balance at September
30, 2015 (unaudited) 17,562,239 $ 5,031,766
Total
Paid-In Accumulated Stockholders'
Capital Earnings Equity
------------- ------------- --------------
Balance at December
31, 2014 $ 53,307 $ 930,926 $ 7,461,161
Common Stock issued
upon exercise of
stock options - - -
Net income - 886,319 886,319
Stock-Based
compensation expense 18,000 - 18,000
------------- ------------- --------------
Balance at September
30, 2015 (unaudited) $ 71,307 $ 1,817,245 $ 8,365,480
The accompanying notes are an integral part of the condensed consolidated financial statements.
OURPET'S COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For the Nine Months Ended
September 30,
2015 2014
----------------- -----------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 886,319 $ 359,935
Adjustments to reconcile net income to
net cash used in operating
activities:
Loss on Disposal of Fixed Assets 20,657 12,323
Depreciation expense 456,981 430,988
Amortization expense 59,328 58,491
Stock option expense 18,000 9,000
(Increase) decrease in assets:
Accounts receivable - trade (932,311) (417,090)
Inventories (908,560) (1,848,425)
Prepaid expenses 11,467 33,901
Amortizable Intangible Asset
Additions (36,524) (67,154)
Increase (decrease) in liabilities:
Accounts payable - trade (245,097) 933,303
Accrued expenses 91,161 (415,195)
Deferred tax liabilities (76,704) (58,234)
----------------- -----------------
Net cash used in operating
activities (655,284) (968,157)
----------------- -----------------
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of property and equipment (490,341) (398,816)
----------------- -----------------
Net cash used in investing
activities (490,341) (398,816)
----------------- -----------------
CASH FLOWS FROM FINANCING ACTIVITIES
Principal borrowings of long-term debt 1,000,000 -
Principal payments on long-term debt (556,048) (335,289)
Borrowings on bank line of credit 611,000 1,649,000
Issuances of Common Stock - 72,500
----------------- -----------------
Net cash provided by financing
activities 1,054,952 1,386,211
----------------- -----------------
Net increase (decrease) in cash (90,673) 19,238
CASH AT BEGINNING OF PERIOD 192,448 57,975
----------------- -----------------
CASH AT END OF PERIOD $ 101,775 $ 77,213
================= =================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION
Interest paid $ 126,552 $ 81,856
Income taxes paid $ 472,150 $ 425,466
SUPPLEMENTAL DISCLOSURE OF NON CASH
TRANSACTIONS
Non cash exercise of stock options/
warrants $ 6,933 $ 539,128
Tooling Obtained through Asset
Purchase $ 85,000 $ -
The accompanying notes are an integral part of the consolidated financial statements.
OURPET'S COMPANY AND SUBSIDIARIES
STATEMENT OF COMPUTATION OF NET INCOME PER SHARE
For the Three Months For the Nine Months
Ended Ended
September 30, September 30,
------------------------ -------------------------
2015 2014 2015 2014
----------- ------------ ------------ ------------
Net income (loss) $ 410,450 $ 77,751 $ 886,319 $ 359,935
Preferred Stock dividend
requirements - (24,610) (35,621) (73,028)
----------- ------------ ------------ ------------
Net income (loss)
attributable to common
stockholders $ 410,450 $ 53,141 $ 850,698 $ 286,907
=========== ============ ============ ============
Basic weighted average
number of common shares
outstanding 17,562,239 17,056,910 17,558,085 16,884,581
Preferred Stock Common
Share Equivalents 1,871,160 - 1,236,160 -
Dilutive Stock Options
outstanding for the
Period 97,973 380,077 111,733 594,024
Dilutive Warrants
outstanding for the
Period 293,420 600,578 314,137 682,372
----------- ------------ ------------ ------------
Diluted weighted average
number of common and
equivalent shares
outstanding 19,824,793 18,037,565 19,220,115 18,160,978
=========== ============ ============ ============
Basic and Diluted Net
income (loss) per common
share $ 0.02 $ 0.00 $ 0.04 $ 0.02
=========== ============ ============ ============
EBITDA Q3'15
1st nine 1st nine
months months
EBITDA Q3'15 Q3'14 2015 2014
-------------------------------------------------------
Net Income $ 410,450 $ 77,751 $ 886,319 $ 359,935
Interest 35,919 31,153 85,221 97,519
Tax Expense 217,236 49,915 496,839 206,723
Depreciation 143,135 143,977 456,981 430,988
Amortization 18,956 20,344 59,328 58,491
----------------------------------------------------------------------------
Total EBITDA $ 825,696 $ 323,140 $ 1,984,688 $ 1,153,656
The above table reconciles the Company’s disclosure of Net Income per GAAP with the non GAAP financial measure EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization). As the investment community has often requested the EBITDA calculation to help them evaluate performance, Management has chosen to provide this disclosure. Although EBITDA is widely used in the investment community as a benchmark to reflect operating performance, financing capability and liquidity, it is not regarded as a measure of operating performance and liquidity under generally accepted accounting principles ("GAAP"). It also does not represent cash flows from operating activities. In addition, the Company’s EBITDA may not be comparable to similar indicators provided by other companies. The Presentation of this additional information is not meant to be considered in isolation or as a substitute for net income (loss), or any component thereof, in accordance with GAAP.
For further information, contact:OurPet's Company Dr. Steven TsengasCEO (440) 343-6500, x111DreamTeamNetwork Austin, Texas www.DreamTeamNetwork.com 512.758.8877 Office [email protected]
Source: The OurPets Co.
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