OurPet's Company Reports Results for 2015 Second Quarter
Record Second Quarter Net Revenue of $5.6 Million; Net Income Up 77% to $262,076
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E-mailFAIRPORT HARBOR, OH -- (Marketwired) -- 08/03/15 -- OurPet's Company (OTCQB: OPCO) (www.ourpets.com), a leading proprietary pet supply company, today reported second quarter revenue increased 4% to a record $5,586,828 for the three months ended June 30, 2015 from $5,360,210 for the same period a year ago. Net income for the 2015 second quarter increased 77% to $262,076 compared to $147,755 the prior year. Diluted net income per share was $0.01 for the second quarter of 2015 and 2014.
Dr. Steven Tsengas, President and CEO, said, "We are encouraged with our results for the second quarter which included record net revenue, increased margins and further progress implementing our dual-brand strategy. All of this was achieved in the midst of a sluggish economy. Sales in Pet Specialty were particularly strong and benefited from recently introduced bowl designs, new cat toys and accessories. The outlook for E-commerce sales remains bright despite a temporary setback in the 2015 second quarter. Sales in the Grocery, Drug, and Mass channel are expected to benefit from the continued roll-out of the PetZone brand coupled with introduction of new products and targeted efforts to expand the retail base."
Dr. Tsengas continued, "We're excited about our growth opportunities in the second half of this year. Several new and exciting proprietary products will be shipped to customers beginning later this month. We also continue to further strengthen our product portfolio through aggressive development of innovative products in each of our key categories: toys/accessories, bowls/feeders and feline waste management. We received very positive feedback from buyers last month at SuperZoo -- the national show for pet retailers. We also received the coveted '1st Place Award for New Cat Products' at SuperZoo. Three proprietary, game-changing products are being developed for the feline waste management category that we expect to release during the first half of 2016."
2015 Second Quarter Results
Net revenue increased 4% to a record $5,586,828 for the 2015 second quarter versus the same period last year. The $227,000 increase was attributable to strong sales in the Pet Specialty channel partially offset by a slight decrease in the Food, Drug and Mass channel and lower E-Commerce sales.
Gross Profit was $1,718,069 for the 2015 second quarter compared to $1,518,445 the prior year. Gross profit margin increased 2.5 percentage points to 30.8% for the 2015 second quarter from 28.3% for the same period a year ago due to continuous improvement initiatives, price increases, and product mix.
Income from operations increased to $422,463 for the 2015 second quarter from $192,758 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 second quarter decreased to $21,277 from $61,232 a year ago due to a higher amount of patent infringement settlements the prior year.
Income before taxes increased 87% to $418,945 for the 2015 second quarter versus the same period a year ago.
Income tax expense for the 2015 second quarter more than doubled to $156,869 from $75,708 a year ago.
Net income increased 77% to $262,076 for the 2015 second quarter from $147,755 last year. Net income per diluted share was $0.01 for the second quarter of 2015 and 2014.
EBITDA was $625,984 for the 2015 second quarter versus $426,753 a year ago. A reconciliation of EBITDA to GAAP net income is provided in an attachment to the summary financial statements.
2015 First Six Months Results
Net revenue increased 6% to $11,184,150 for the first half of 2015. The year-over-year increase was due to strong Pet Specialty sales plus higher sales in the Grocery, Drug and Mass channel.
Gross profit increased 11% to $3,412,414 for the first six months of 2015 versus the prior year. Gross profit margin increased 1.4 percentage points to 30.5% for the first six months of 2015 from 29.1% the prior year due to the same factors that benefited the 2015 second quarter results.
Income from operations increased 80% to $778,776 for the 2015 first half, which was attributable to higher gross profit and lower selling, general, and administrative expenses.
Other income decreased to $26,000 for the first six months of 2015 from $71,662 for the same period last year due to a greater amount of patent infringement settlements in 2014.
Income before taxes increased 72% to $755,474 for the first half of 2015 versus the same period a year ago.
Income tax expense was $279,606 for the first six months of 2015 compared to $156,808 the prior year.
Net income for the first six months of 2015 increased 69% to $475,868 from $282,184 for the same period in 2014. Net income per share increased to $0.02 for the first six months of 2015 from $.01 last year.
EBITDA increased 40% to $1,158,994 the first half of 2015 compared to $830,516 the prior year. A reconciliation of EBITDA to GAAP Net Income is provided in an attachment to the summary financial statements.
Investor Conference Call
OurPet's Company has scheduled an investor conference call for Monday, August 3, 2015, at 4:30 pm. Eastern Time (ET). Dr. Steve Tsengas, Chairman and CEO, and Scott Mendes, Chief Financial Officer, will discuss the company's growth strategy and financial results followed by a question and answer session. To participate in the conference call, individuals should dial (877) 485-3107. Phone lines will open at 4:20 p.m. ET. A digital replay of the investor conference call will be available following the call on the company's website: www.ourpets.com/investor/investors.html.
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. Investor 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.
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 BALANCE SHEETS
June 30, December 31,
2015 2014
(unaudited)
------------- -------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 38,400 $ 192,448
Accounts receivable - trade, less allowance
for doubtful accounts of $37,824 and
$39,539 3,507,030 3,116,448
Inventories net of reserve 8,047,370 6,894,115
Prepaid expenses 470,833 478,593
------------- -------------
Total current assets 12,063,633 10,681,604
------------- -------------
PROPERTY AND EQUIPMENT
Computers and office equipment 974,857 883,163
Warehouse equipment 581,974 567,816
Leasehold improvements 289,217 276,952
Tooling 4,207,203 3,885,401
Construction in progress 216,000 157,031
------------- -------------
Total 6,269,251 5,770,363
Less accumulated depreciation 4,314,660 4,000,815
------------- -------------
Net property and equipment 1,954,591 1,769,548
------------- -------------
OTHER ASSETS
Amortizable Intangible Assets, less
amortization of $457,722 and $417,349 366,632 384,063
Intangible Assets 461,000 461,000
Goodwill 67,511 67,511
Deposits and other assets 18,003 18,003
------------- -------------
Total other assets 913,146 930,577
------------- -------------
Total assets $ 14,931,370 $ 13,381,729
============= =============
The accompanying notes are an integral part of the consolidated financial
statements.
OURPET'S COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (CONTINUED)
June 30, December 31,
2015 2014
(unaudited)
-------------- -------------
LIABILITIES
CURRENT LIABILITIES
Current maturities of long-term debt $ 520,420 $ 601,632
Accounts payable - trade 1,885,647 1,489,982
Other accrued expenses 621,607 565,491
-------------- -------------
Total current liabilities 3,027,674 2,657,105
-------------- -------------
LONG-TERM LIABILITIES
Long-term debt - less current portion above 160,708 119,780
Revolving Line of Credit 3,567,032 2,862,032
Deferred Income Taxes 226,927 281,651
-------------- -------------
Total long term liabilities 3,954,667 3,263,463
Total liabilities 6,982,341 5,920,568
-------------- -------------
STOCKHOLDERS' EQUITY
COMMON STOCK
No par value; 50,000,000 shares authorized,
17,562,239 and 17,553,007shares issued and
outstanding at June 30, 2015 and December
31, 2014respectively 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 June 30, 2015 and December
31, 2014 respectively 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 June 30, 2015 and December
31, 2014 865,312 865,312
PAID-IN CAPITAL 65,307 53,307
ACCUMULATED EARNINGS 1,406,794 930,926
-------------- -------------
Total stockholders' equity 7,949,029 7,461,161
-------------- -------------
Total liabilities and stockholders' equity $ 14,931,370 $ 13,381,729
============== =============
The accompanying notes are an integral part of the consolidated financial
statements.
OURPET'S COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months Ended For the Six Months Ended
June 30, June 30,
2015 2014 2015 2014
------------ ------------ ------------ ------------
Net revenue $ 5,586,828 $ 5,360,210 $ 11,184,150 $ 10,574,681
Cost of goods sold 3,868,759 3,841,765 7,771,736 7,502,334
------------ ------------ ------------ ------------
Gross profit on
sales 1,718,069 1,518,445 3,412,414 3,072,347
Selling, general and
administrative
expenses 1,295,606 1,325,687 2,633,638 2,638,651
------------ ------------ ------------ ------------
Income from
operations 422,463 192,758 778,776 433,696
Other income (21,277) (61,232) (26,000) (71,662)
Interest expense 24,795 30,527 49,302 66,366
------------ ------------ ------------ ------------
Income before income
taxes 418,945 223,463 755,474 438,992
Income tax expense 156,869 75,708 279,606 156,808
------------ ------------ ------------ ------------
Net income $ 262,076 $ 147,755 $ 475,868 $ 282,184
============ ============ ============ ============
Basic and Diluted
Earnings Per Common
ShareAfter Dividend
Requirements For
PreferredStock:
Net Income $ 0.01 0.01 $ 0.02 $ 0.01
============ ============ ============ ============
Weighted average
number of common
sharesoutstanding
used to
calculatebasic 17,558,838 16,897,781 17,555,973 16,798,259
earnings per share
============ ============ ============ ============
Weighted average
number of common
andequivalent
shares outstanding
used tocalculate
diluted earnings 19,201,418 18,205,549 19,172,847 18,244,626
per share
============ ============ ============ ============
The accompanying notes are an integral part of the consolidated financial
statements.
OURPET'S COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 2015
Series 2009
Preferred Stock Preferred Stock Common Stock
--------------- ---------------- ---------------------
Number Number
of of Number of
Shares Amount Shares Amount Shares Amount
------ -------- ------- -------- ---------- ----------
Balance at December
31, 2014 63,500 $579,850 123,616 $865,312 17,553,007 $5,031,766
Common Stock issued
upon exercise of
stock options 9,232
Net income
Stock-Based
compensation expense
------------------------------------------------------
Balance at June 30,
2015 (unaudited) 63,500 $579,850 123,616 $865,312 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 475,868 475,868
Stock-Based
compensation expense 12,000 12,000
------------------------------------------
Balance at June 30,
2015 (unaudited) $ 65,307 $ 1,406,794 $ 7,949,029
OURPET'S COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Six Months Ended
June 30,
2015 2014
------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 475,868 $ 282,184
Adjustments to reconcile net income to net
cash provided by operating activities:
Loss on Fixed Assets Written Off 6,638 -
Depreciation expense 313,846 287,011
Amortization expense 40,372 38,147
Stock option expense 12,000 6,000
(Increase) decrease in assets:
Accounts receivable - trade (390,582) (220,866)
Inventories (1,153,255) (1,345,359)
Prepaid expenses 7,760 (66,667)
Amortizable Intangible Asset Additions (22,940) (37,450)
Increase (decrease) in liabilities:
Accounts payable - trade 395,665 939,913
Accrued expenses 56,116 (409,420)
Deferred tax liabilities (54,724) (34,892)
------------- -------------
Net cash used in operating
activities (313,236) (561,399)
------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of property and equipment (420,528) (360,772)
------------- -------------
Net cash used in investing activities (420,528) (360,772)
------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on long-term debt (125,284) (273,307)
Net borrowing on bank line of credit 705,000 1,334,000
------------- -------------
Net cash provided by financing
activities 579,716 1,060,693
------------- -------------
Net increase (decrease) in cash (154,048) 138,522
CASH AT BEGINNING OF PERIOD 192,448 57,975
------------- -------------
CASH AT END OF PERIOD $ 38,400 $ 196,497
============= =============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION
Interest paid $ 38,722 $ 57,521
Income taxes paid $ 256,000 $ 320,500
SUPPLEMENTAL DISCLOSURE OF NON CASH
TRANSACTIONS
Non cash exercise of stock options/
warrants $ 6,933 $ 232,645
Tooling Obtained through Asset Purchase $ 85,000
The accompanying notes are an integral part of the consolidated financial
statements.
Exhibit 11
OURPET'S COMPANY AND SUBSIDIARIES
STATEMENT OF COMPUTATION OF NET INCOME PER SHARE
For the Three Months
Ended For the Six Months Ended
June 30, June 30,
------------------------ ------------------------
2015 2014 2015 2014
----------- ----------- ----------- -----------
Net income $ 262,076 $ 147,755 $ 475,868 $ 282,184
Preferred Stock dividend
requirements (11,399) (27,826) (22,672) (55,346)
----------- ----------- ----------- -----------
Net income attributable
to common stockholders $ 250,677 $ 119,929 $ 453,196 $ 226,838
=========== =========== =========== ===========
Basic weighted average
number of common shares
outstanding 17,558,838 16,897,781 17,555,973 16,798,259
Preferred Stock Common
Share Equivalents 1,236,160 1,236,160
Dilutive Stock Options
outstanding for the
Period 104,772 586,293 57,958 692,864
Dilutive Warrants
outstanding for the
Period 301,649 721,475 322,755 753,503
----------- ----------- ----------- -----------
Diluted Weighted average
number of common and
equivalent shares
outstanding 19,201,418 18,205,549 19,172,847 18,244,626
=========== =========== =========== ===========
Basic and Diluted Net
income per common share $ 0.01 $ 0.01 $ 0.02 $ 0.01
=========== =========== =========== ===========
OURPET'S COMPANY AND SUBSIDIARIES
CONSOLIDATED OPERATING RESULTS
For the Three Months Ended For the Six Months Ended
June 30, June 30,
-------------------------- --------------------------
2015 2014 2015 2014
------------ ------------ ------------ ------------
Net revenue $ 5,586,828 $ 5,360,210 $ 11,184,150 $ 10,574,681
Cost of goods sold 3,868,759 3,841,765 7,771,736 7,502,334
------------ ------------ ------------ ------------
Gross profit on
sales 1,718,069 1,518,445 3,412,414 3,072,347
Selling, general and
administrative
expenses 1,295,606 1,325,687 2,633,638 2,638,651
------------ ------------ ------------ ------------
Income from
operations 422,463 192,758 778,776 433,696
Other income (21,277) (61,232) (26,000) (71,662)
Interest expense 24,795 30,527 49,302 66,366
------------ ------------ ------------ ------------
Income before taxes 418,945 223,463 755,474 438,992
Income Tax expense 156,869 75,708 279,606 156,808
------------ ------------ ------------ ------------
Net Income $ 262,076 $ 147,755 $ 475,868 $ 282,184
============ ============ ============ ============
Basic and Diluted
Net Income Per
CommonShare After
Dividend
Requirements For
PreferredStock $ 0.01 $ 0.01 $ 0.02 $ 0.01
============ ============ ============ ============
Weighted average
number of common
sharesoutstanding
used to
calculatebasic 17,558,838 16,897,781 17,555,973 16,798,259
earnings per share
============ ============ ============ ============
Weighted average
number of common
andequivalent
shares outstanding
used tocalculate
diluted earnings 19,201,418 18,205,549 19,172,847 18,244,626
per share
============ ============ ============ ============
OURPET'S COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
June 30, December 31,
2015 2014
------------ ------------
ASSETS
Cash and
equivalents $ 38,400 $ 192,448
Receivables, net 3,507,030 3,116,448
Inventories, net 8,047,370 6,894,115
Prepaid expenses 470,833 478,593
------------ ------------
Total current
assets 12,063,633 10,681,604
LONG TERM ASSETS
Property and
equipment, net 1,954,591 1,769,548
Amortizable
Intangible
Assets, net 366,632 384,063
Intangible Assets 461,000 461,000
Goodwill 67,511 67,511
Deposits and Other
assets 18,003 18,003
------------ ------------
Total long term
assets 2,867,737 2,700,125
Total assets $ 14,931,370 $ 13,381,729
============ ============
LIABILITIES AND
STOCKHOLDERS'
EQUITY
Current maturities
of long-term debt 520,420 601,632
Accounts payable 1,885,647 1,489,982
Accrued expenses 621,607 565,491
------------ ------------
Total current
liabilities 3,027,674 2,657,105
LONG TERM
LIABILITIES
Long-term debt -
less current
portion above 160,708 119,780
Revolving line of
credit 3,567,032 2,862,032
Deferred income
taxes 226,927 281,651
------------ ------------
Total long term
liabilities 3,954,667 3,263,463
Total
liabilities 6,982,341 5,920,568
------------ ------------
Stockholders'
Equity 7,949,029 7,461,161
------------ ------------
Total
liabilities and
stockholders'
equity $ 14,931,370 $ 13,381,729
============ ============
1st six 1st six
EBITDA Q2'15 Q2'14 months 2015 months 2014
-------------------------------------------------------
Net Income $ 262,076 $ 147,755 $ 475,868 $ 282,184
Interest 24,795 30,527 49,302 66,366
Tax Expense 156,869 75,708 279,606 156,808
Depreciation 161,966 153,326 313,846 287,011
Amortization 20,278 19,437 40,372 38,147
----------------------------------------------------------------------------
Total EBITDA $ 625,984 $ 426,753 $ 1,158,994 $ 830,516
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:CONTACTSOurPet's Company Dr. Steven Tsengas CEO (440) 343-6500, x111 INVESTOR RELATIONSInvestQuest, Inc.Robert Lentz(614) 876-1900
Source: The OurPets Co.
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