OurPet’s Company Reports 2014 First Quarter Results
FAIRPORT HARBOR, Ohio – April 24, 2014—OurPet’s Company (OTCBB:OPCO) (www.ourpets.com), a leading proprietary pet supply company, today reported 2014 first quarter net revenue increased 3.5% to $5,214,471 from $5,040,645 for the same period last year. In addition to adverse weather conditions, higher than budgeted costs related to entry into the private label-value brand market and increased promotions contributed to a decline in income from operations for the 2014 first quarter versus the prior year. Net income was $134,427 for the 2014 first quarter compared to $223,601 a year ago. Earnings per diluted share were $0.01 for the first quarter of 2014 and 2013.
Dr. Steven Tsengas, Chairman and CEO, commented, “Our results for the 2014 first quarter were below expectations due to factors that had a temporary adverse impact on financial performance. We remain optimistic that our 2014 full-year results will achieve record net revenue and record earnings per share. The severe weather conditions we faced during the first three months of 2014 have recently subsided which has also benefited consumer spending, especially by customers at our largest accounts. We are accelerating plans to implement the company’s dual brand growth strategy during the remainder of 2014.”
Dr. Tsengas added, “We have made substantial investments in the roll-out of our dual brand strategy, which include increased business and product development plus higher selling and marketing expenses in order to penetrate key markets in the United States and overseas. Shipments of PetZone® branded products to Food, Mass and Drug customers are expected later this quarter. We further expanded our presence in this market with the addition of new customers in the recently completed quarter. Sales of feline waste and odor control products declined compared to the 2013 first quarter due to temporary timing issues related to the launch of the expanded line of SmartScoop®products. Branded products offered through E-Commerce continued to achieve solid year-over-year sales gains. Interest from current and prospective customers at last month’s Global Pet Expo in new products and company’s dual brand strategy further strengthen the outlook for 2014.”
2014 First Quarter Results
Net revenue increased 3.5% to $5,214,471 for the three months ended March 31, 2014, from $5,040,645 for the same period a year ago. Sales increases in the Food Drug & Mass and E-Commerce markets were partly offset by decreased sales of Pet Specialty products.
Gross profit increased 6.7% to $1,553,901 for the 2014 first quarter from $1,456,371 a year ago. This $97,530 increase in gross profit was primarily attributable to higher sales and lower fixed operating costs versus the 2013 first quarter. Bad weather, promotional sales and some higher than planned costs to enter the private label value market were the principal factors that adversely impacted gross profit for the 2014 first quarter compared to the same period last year. Gross profit margin increased to 29.8% for the 2014 first quarter from 28.9% for the same quarter a year ago.
Income from operations was $240,936 for the 2014 first quarter versus $304,202 for the 2013 first quarter. This decrease was due to higher selling, general and administrative (SG&A) expenses, which included costs related to the roll-out of the company’s dual brand product strategy.
Income before taxes was $215,527 for the 2014 first quarter versus $304,740 the prior year.
Income tax expense of approximately $81,000 for the 2014 first quarter was similar to the same quarter last year. The company’s book tax rate was 37.6% for the three months ended March 31, 2014, compared to 26.6% for the same period in 2013.
Net Income was $134,427 for the 2014 first quarter versus $233,601 for the same period last year. Earnings per share were $0.01 for the first quarter of 2014 and 2013.
EBITDA for the first three months of 2014 was $403,761 compared to $508,805 for the same period a year ago. Depreciation and amortization expense was $152,395 for the 2014 first quarter or $11,425 below the 2013 first quarter. 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 Thursday, April 24, 2014, 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 visitwww.ourpets.com for more information about our company and its products. OurPet’s websites includewww.petzonebrand.comandwww.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. For further information, contact:
| CONTACTS | INVESTOR RELATIONS |
| OurPet’s Company | InvestQuest, Inc. |
| Dr. Steven Tsengas, CEO | Robert Lentz |
| (440) 343-6500, x111 | (614) 876-1900 |
OURPET'S COMPANY AND SUBSIDIARIES
CONSOLIDATED OPERATING RESULTS
| | | For the Three Months Ended | |
| | | March 31, | |
| | | 2014 | | | 2013 | |
| | | | | | | |
| Net revenue | | $ | 5,214,471 | | | $ | 5,040,645 | |
| Cost of goods sold | | | 3,660,570 | | | | 3,584,274 | |
| Gross profit on sales | | | 1,553,901 | | | | 1,456,371 | |
| | | | | | | | | |
| Selling, general and administrative expenses | | | 1,312,965 | | | | 1,152,169 | |
| | | | | | | | | |
| Income from operations | | | 240,936 | | | | 304,202 | |
| | | | | | | | | |
| Other income | | | (10,430 | ) | | | (40,783 | ) |
| Interest expense | | | 35,839 | | | | 40,245 | |
| Income before taxes | | | 215,527 | | | | 304,740 | |
| | | | | | | | | |
| Income Tax expense | | | 81,100 | | | | 81,139 | |
| Net Income | | $ | 134,427 | | | $ | 223,601 | |
| | | | | | | | | |
| Basic and Diluted Earnings Per Common Share | | | | | | | | |
| After Dividend Requirements For Preferred Stock: | | | | | | | | |
| Net Income | | $ | 0.01 | | | $ | 0.01 | |
| | | | | | | | | |
| Weighted average number of common shares outstanding used to calculate basic earnings per share | | | 16,695,076 | | | | 15,883,560 | |
| | | | | | | | | |
| Weighted average number of common and equivalent shares outstanding used to calculate diluted earnings per share | | | 18,297,349 | | | | 17,645,946 | |
OURPET'S COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
| | | March 31, | | | December 31, | |
| | | 2014 | | | 2013 | |
| ASSETS | | | | | | | | |
| Cash and equivalents | | $ | 91,650 | | | $ | 57,975 | |
| Receivables, net | | | 2,650,309 | | | | 2,811,139 | |
| Inventories, net | | | 6,922,298 | | | | 5,876,724 | |
| Prepaid expenses | | | 534,591 | | | | 397,268 | |
| Total current assets | | | 10,198,848 | | | | 9,143,106 | |
| | | | | | | | | |
| LONG TERM ASSETS | | | | | | | | |
| Property and equipment, net | | | 1,990,727 | | | | 1,891,209 | |
| Amortizable intangible assets, net | | | 362,373 | | | | 370,850 | |
| Intangible Assets | | | 461,000 | | | | 461,000 | |
| Goodwill | | | 67,511 | | | | 67,511 | |
| Deposits and Other assets | | | 18,003 | | | | 18,003 | |
| Total long term assets | | | 2,899,614 | | | | 2,808,573 | |
| | | | | | | | | |
| Total assets | | $ | 13,098,462 | | | $ | 11,951,679 | |
| | | | | | | | | |
| LIABILITIES AND STOCKHOLDERS' EQUITY | | | | | | | | |
| Notes payable | | $ | 100,000 | | | $ | 100,000 | |
| Current maturities of long-term debt | | | 312,049 | | | | 397,575 | |
| Accounts payable | | | 2,097,738 | | | | 1,169,925 | |
| Accrued expenses | | | 507,438 | | | | 861,010 | |
| Total current liabilities | | | 3,017,225 | | | | 2,528,510 | |
| | | | | | | | | |
| LONG TERM LIABILITIES | | | | | | | | |
| Long-term debt - less current portion above | | | 670,378 | | | | 721,389 | |
| Revolving line of credit | | | 2,415,032 | | | | 1,833,032 | |
| Deferred income taxes | | | 232,427 | | | | 245,775 | |
| Total long term liabilities | | | 3,317,837 | | | | 2,800,196 | |
| | | | | | | | | |
| Total liabilities | | | 6,335,062 | | | | 5,328,706 | |
| | | | | | | | | |
| Stockholders' Equity | | | 6,763,400 | | | | 6,622,973 | |
| | | | | | | | | |
| Total liabilities and stockholders' equity | | $ | 13,098,462 | | | $ | 11,951,679 | |
| EBITDA | | Q1'14 | | | Q1'13 | |
| | | | | | | |
| Net Income | | $ | 134,427 | | | $ | 223,601 | |
| Interest expense | | $ | 35,839 | | | | 40,245 | |
| Tax Expense | | $ | 81,100 | | | | 81,139 | |
| Depreciation | | $ | 133,685 | | | | 152,189 | |
| Amortization | | $ | 18,710 | | | | 11,631 | |
| Total EBITDA | | $ | 403,761 | | | $ | 508,805 | |
| | | | | | | | | |
| Stock Options expense | | $ | 3,000 | | | $ | 6,000 | |
| Warrants expense | | $ | 3,000 | | | $ | 3,000 | |
| Total Adjusted EBITDA | | $ | 409,761 | | | $ | 517,805 | |
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.
