Cover Page
Cover Page - shares | 6 Months Ended | |
Jun. 30, 2023 | Aug. 09, 2023 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jun. 30, 2023 | |
Document Transition Report | false | |
Entity File Number | 001-38163 | |
Entity Registrant Name | PetIQ, Inc. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 35-2554312 | |
Entity Address, Address Line One | 230 E. Riverside Dr. | |
Entity Address, City or Town | Eagle | |
Entity Address, State or Province | ID | |
Entity Address, Postal Zip Code | 83616 | |
City Area Code | 208 | |
Local Phone Number | 939-8900 | |
Title of 12(b) Security | Class A Common Stock, $0.001 par value | |
Trading Symbol | PETQ | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Central Index Key | 0001668673 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q2 | |
Current Fiscal Year End Date | --12-31 | |
Class A common stock | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 29,182,311 | |
Class B common stock | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 239,540 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Current assets | ||
Cash and cash equivalents | $ 78,437 | $ 101,265 |
Accounts receivable, net | 193,570 | 118,004 |
Inventories | 141,647 | 142,605 |
Other current assets | 8,788 | 8,238 |
Total current assets | 422,442 | 370,112 |
Property, plant and equipment, net | 69,776 | 73,395 |
Operating lease right of use assets | 15,440 | 18,231 |
Other non-current assets | 2,426 | 1,373 |
Intangible assets, net | 169,182 | 172,479 |
Goodwill | 204,204 | 183,306 |
Total assets | 883,470 | 818,896 |
Current liabilities | ||
Accounts payable | 154,141 | 112,995 |
Accrued wages payable | 11,826 | 11,512 |
Accrued interest payable | 1,465 | 1,912 |
Other accrued expenses | 9,909 | 7,725 |
Current portion of operating leases | 6,211 | 6,595 |
Current portion of long-term debt and finance leases | 8,152 | 8,751 |
Total current liabilities | 191,704 | 149,490 |
Operating leases, less current installments | 9,957 | 12,405 |
Long-term debt, less current installments | 440,582 | 443,276 |
Finance leases, less current installments | 837 | 907 |
Other non-current liabilities | 4,787 | 1,025 |
Total non-current liabilities | 456,163 | 457,613 |
Equity | ||
Additional paid-in capital | 383,020 | 378,709 |
Class A treasury stock, at cost, 373 shares | (3,857) | (3,857) |
Accumulated deficit | (143,566) | (162,733) |
Accumulated other comprehensive loss | (1,990) | (2,224) |
Total stockholders' equity | 233,636 | 209,924 |
Non-controlling interest | 1,967 | 1,869 |
Total equity | 235,603 | 211,793 |
Total liabilities and equity | 883,470 | 818,896 |
Class A common stock | ||
Equity | ||
Common stock value | 29 | 29 |
Class B common stock | ||
Equity | ||
Common stock value | $ 0 | $ 0 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares shares in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Treasury stock, shares outstanding (in shares) | 373 | 373 |
Class A common stock | ||
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock authorized (in shares) | 125,000 | 125,000 |
Common stock, shares, issued (in shares) | 29,551 | 29,348 |
Class B common stock | ||
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock authorized (in shares) | 8,402 | 8,402 |
Common stock, shares, issued (in shares) | 244 | 252 |
Common stock, shares outstanding (in shares) | 244 | 252 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Total net sales | $ 314,547 | $ 252,014 | $ 605,018 | $ 527,709 |
Total cost of sales | 240,668 | 190,040 | 468,879 | 408,100 |
Gross profit | 73,879 | 61,974 | 136,139 | 119,609 |
Operating expenses | ||||
Selling, general and administrative expenses | 55,159 | 50,595 | 98,486 | 98,831 |
Operating income | 18,720 | 11,379 | 37,653 | 20,778 |
Interest expense, net | 8,824 | 6,299 | 17,556 | 12,420 |
Other expense (income), net | 151 | (201) | 123 | (204) |
Total other expense, net | 8,975 | 6,098 | 17,679 | 12,216 |
Pretax net income | 9,745 | 5,281 | 19,974 | 8,562 |
Income tax expense | (192) | (603) | (640) | (724) |
Net income | 9,553 | 4,678 | 19,334 | 7,838 |
Net income attributable to non-controlling interest | 85 | 46 | 167 | 75 |
Net income attributable to PetIQ, Inc. | $ 9,468 | $ 4,632 | $ 19,167 | $ 7,763 |
Net income per share attributable to PetIQ, Inc. Class A common stock | ||||
Basic (in dollars per share) | $ 0.32 | $ 0.16 | $ 0.66 | $ 0.27 |
Diluted (in dollars per share) | $ 0.32 | $ 0.16 | $ 0.66 | $ 0.26 |
Weighted Average shares of Class A common stock outstanding | ||||
Basic (in shares) | 29,136 | 29,283 | 29,083 | 29,223 |
Diluted (in shares) | 29,373 | 29,329 | 29,218 | 29,304 |
Products | ||||
Total net sales | $ 278,167 | $ 219,014 | $ 537,160 | $ 466,764 |
Total cost of sales | 210,428 | 163,568 | 411,330 | 354,419 |
Services | ||||
Total net sales | 36,380 | 33,000 | 67,858 | 60,945 |
Total cost of sales | $ 30,240 | $ 26,472 | $ 57,549 | $ 53,681 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Comprehensive Income (Loss) | ||||
Net income | $ 9,553 | $ 4,678 | $ 19,334 | $ 7,838 |
Foreign currency translation adjustment | 287 | (1,077) | 236 | (1,533) |
Comprehensive income | 9,840 | 3,601 | 19,570 | 6,305 |
Comprehensive income attributable to non-controlling interest | 87 | 36 | 169 | 61 |
Comprehensive income attributable to PetIQ, Inc. | $ 9,753 | $ 3,565 | $ 19,401 | $ 6,244 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Cash flows from operating activities | ||
Net income | $ 19,334 | $ 7,838 |
Adjustments to reconcile net income to net cash provided by (used in) operating activities | ||
Depreciation and amortization of intangible assets and loan fees | 19,769 | 17,660 |
Stock based compensation expense | 5,208 | 6,666 |
Other non-cash activity | (135) | 48 |
Changes in assets and liabilities, net of business acquisition | ||
Accounts receivable | (74,468) | (54,969) |
Inventories | 2,901 | (63,771) |
Other assets | (481) | (409) |
Accounts payable | 40,320 | 26,481 |
Accrued wages payable | 252 | (2,359) |
Other accrued expenses | 1,703 | (2,569) |
Net cash provided by (used in) operating activities | 14,403 | (65,384) |
Cash flows from investing activities | ||
Business acquisition (net of cash acquired) | (27,634) | 0 |
Purchase of property, plant, and equipment | (4,128) | (8,026) |
Net cash used in investing activities | (31,762) | (8,026) |
Cash flows from financing activities | ||
Proceeds from issuance of long-term debt | 35,000 | 44,000 |
Principal payments on long-term debt | (38,800) | (42,800) |
Principal payments on finance lease obligations | (801) | (744) |
Tax withholding payments on Restricted Stock Units | (969) | (865) |
Exercise of options to purchase Class A common stock | 0 | 115 |
Net cash used in financing activities | (5,570) | (294) |
Net change in cash and cash equivalents | (22,929) | (73,704) |
Effect of exchange rate changes on cash and cash equivalents | 101 | (306) |
Cash and cash equivalents, beginning of period | 101,265 | 79,406 |
Cash and cash equivalents, end of period | 78,437 | 5,396 |
Supplemental cash flow information | ||
Interest paid | 16,657 | 13,380 |
Net change in property, plant, and equipment acquired through accounts payable | 52 | 595 |
Finance lease additions | 0 | 59 |
Income taxes paid, net of refunds | $ 326 | $ 244 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Equity - USD ($) shares in Thousands, $ in Thousands | Total | Accumulated Deficit | Accumulated Other Comprehensive Loss | Class A Treasury Stock | Additional Paid-in Capital | Non-controlling Interest | Class A common stock Common Stock | Class B common stock | Class B common stock Common Stock |
Beginning balance at Dec. 31, 2021 | $ 255,220 | $ (114,525) | $ (684) | $ 368,006 | $ 2,394 | $ 29 | $ 0 | ||
Beginning common stock, shares outstanding (in shares) at Dec. 31, 2021 | 29,139 | 272 | |||||||
Increase (Decrease) in Stockholders' Equity | |||||||||
Exchange of LLC Interests held by LLC Owners (in shares) | 20 | (20) | |||||||
Exchange of LLC Interests held by LLC Owners | 0 | 192 | (192) | ||||||
Other comprehensive income | (1,533) | (1,519) | (14) | ||||||
Stock based compensation expense | 6,666 | 6,609 | 57 | ||||||
Exercise of options to purchase common stock (in shares) | 2 | ||||||||
Exercise of Options to purchase common stock | 115 | 115 | |||||||
Issuance of stock vesting of RSU's, net of withholdings (in shares) | 143 | ||||||||
Issuance of stock vesting of RSU's, net of tax withholdings | (865) | (865) | |||||||
Net income | 7,838 | 7,763 | 75 | ||||||
Ending balance at Jun. 30, 2022 | 267,441 | (106,762) | (2,203) | 374,057 | 2,320 | $ 29 | $ 0 | ||
Ending common stock, shares outstanding (in shares) at Jun. 30, 2022 | 29,304 | 252 | |||||||
Beginning balance at Dec. 31, 2021 | $ 255,220 | (114,525) | (684) | 368,006 | 2,394 | $ 29 | $ 0 | ||
Beginning common stock, shares outstanding (in shares) at Dec. 31, 2021 | 29,139 | 272 | |||||||
Increase (Decrease) in Stockholders' Equity | |||||||||
Exercise of options to purchase common stock (in shares) | 2 | ||||||||
Ending balance at Dec. 31, 2022 | $ 211,793 | (162,733) | (2,224) | $ (3,857) | 378,709 | 1,869 | $ 29 | $ 0 | |
Ending common stock, shares outstanding (in shares) at Dec. 31, 2022 | 29,348 | 252 | 252 | ||||||
Ending treasury stock, shares outstanding (in shares) at Dec. 31, 2022 | 373 | 373 | |||||||
Beginning balance at Mar. 31, 2022 | $ 261,159 | (111,394) | (1,136) | 371,398 | 2,262 | $ 29 | $ 0 | ||
Beginning common stock, shares outstanding (in shares) at Mar. 31, 2022 | 29,272 | 252 | |||||||
Increase (Decrease) in Stockholders' Equity | |||||||||
Other comprehensive income | (1,077) | (1,067) | (10) | ||||||
Stock based compensation expense | 2,843 | 2,821 | 22 | ||||||
Exercise of options to purchase common stock (in shares) | 0 | ||||||||
Exercise of Options to purchase common stock | 15 | 15 | |||||||
Issuance of stock vesting of RSU's, net of withholdings (in shares) | 33 | ||||||||
Issuance of stock vesting of RSU's, net of tax withholdings | (177) | (177) | |||||||
Net income | 4,678 | 4,632 | 46 | ||||||
Ending balance at Jun. 30, 2022 | 267,441 | (106,762) | (2,203) | 374,057 | 2,320 | $ 29 | $ 0 | ||
Ending common stock, shares outstanding (in shares) at Jun. 30, 2022 | 29,304 | 252 | |||||||
Beginning balance at Dec. 31, 2022 | 211,793 | (162,733) | (2,224) | $ (3,857) | 378,709 | 1,869 | $ 29 | $ 0 | |
Beginning common stock, shares outstanding (in shares) at Dec. 31, 2022 | 29,348 | 252 | 252 | ||||||
Increase (Decrease) in Stockholders' Equity | |||||||||
Exchange of LLC Interests held by LLC Owners (in shares) | 8 | (8) | |||||||
Exchange of LLC Interests held by LLC Owners | 0 | 115 | (115) | ||||||
Other comprehensive income | 236 | 234 | 2 | ||||||
Stock based compensation expense | 5,208 | 5,165 | 44 | ||||||
Issuance of stock vesting of RSU's, net of withholdings (in shares) | 195 | ||||||||
Issuance of stock vesting of RSU's, net of tax withholdings | (969) | (969) | |||||||
Net income | 19,334 | 19,167 | 167 | ||||||
Ending balance at Jun. 30, 2023 | $ 235,603 | (143,566) | (1,990) | $ (3,857) | 383,020 | 1,967 | $ 29 | $ 0 | |
Ending common stock, shares outstanding (in shares) at Jun. 30, 2023 | 29,551 | 244 | 244 | ||||||
Ending treasury stock, shares outstanding (in shares) at Jun. 30, 2023 | 373 | 373 | |||||||
Beginning balance at Mar. 31, 2023 | $ 223,149 | (153,034) | (2,275) | $ (3,857) | 380,429 | 1,857 | $ 29 | $ 0 | |
Beginning common stock, shares outstanding (in shares) at Mar. 31, 2023 | 29,499 | 244 | |||||||
Beginning treasury stock, shares outstanding (in shares) at Mar. 31, 2023 | 373 | ||||||||
Increase (Decrease) in Stockholders' Equity | |||||||||
Other comprehensive income | 287 | 285 | 2 | ||||||
Stock based compensation expense | 2,743 | 2,720 | 23 | ||||||
Issuance of stock vesting of RSU's, net of withholdings (in shares) | 52 | ||||||||
Issuance of stock vesting of RSU's, net of tax withholdings | (129) | (129) | |||||||
Net income | 9,553 | 9,468 | 85 | ||||||
Ending balance at Jun. 30, 2023 | $ 235,603 | $ (143,566) | $ (1,990) | $ (3,857) | $ 383,020 | $ 1,967 | $ 29 | $ 0 | |
Ending common stock, shares outstanding (in shares) at Jun. 30, 2023 | 29,551 | 244 | 244 | ||||||
Ending treasury stock, shares outstanding (in shares) at Jun. 30, 2023 | 373 | 373 |
Principal Business Activity and
Principal Business Activity and Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2023 | |
Accounting Policies [Abstract] | |
Principal Business Activity and Significant Accounting Policies | Note 1 — Principal Business Activity and Significant Accounting Policies Principal Business Activity and Principles of Consolidation PetIQ, Inc. ("PetIQ", the "Company", "we", "our", or "us") is a leading pet medication and wellness company delivering a smarter way for pet parents to help their pets live their best lives through convenient access to affordable veterinary products and services. We engage with customers through more than 60,000 points of distribution across retail and e-commerce channels with our branded and distributed medications as well as health and wellness items, which are further supported by our world-class medications manufacturing facility in Omaha, Nebraska and health and wellness manufacturing facility in Springville, Utah. Our national service platform operates in over 2,600 retail partner locations in 41 states, providing cost effective and convenient veterinary wellness services. PetIQ believes that pets are an important part of the family and deserve the best products and care that we can give them. PetIQ has two reporting segments: (i) Products; and (ii) Services. The Products segment consists of our manufacturing and distribution business. The Services segment consists of veterinary and wellness services and related product sales provided by the Company directly to consumers. PetIQ is the managing member of PetIQ Holdings, LLC (“HoldCo”), a Delaware limited liability company, which is the sole member of PetIQ, LLC (“OpCo”) and, through HoldCo, operates and controls all of the business and affairs of OpCo. The condensed consolidated financial statements as of June 30, 2023 and December 31, 2022 and for the three and six months ended June 30, 2023 and 2022 are unaudited. The condensed consolidated balance sheet as of December 31, 2022 has been derived from the audited financial statements at that date but does not include all of the disclosures required by U.S. GAAP. These interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements as of and for the year ended December 31, 2022 and related notes thereto included in the most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on February 28, 2023 (the "Annual Report"). Operating results for the interim periods are not necessarily indicative of the results that may be expected for the full year. Use of Estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of sales and expenses during the reporting period. Actual results could differ from those estimates. Significant items subject to such estimates and assumptions include the useful lives of property, plant, and equipment and intangible assets; the valuation of property, plant, and equipment, intangible assets and goodwill, the valuation of deferred tax assets, the valuation of inventories, and reserves for legal contingencies. Significant Accounting Policies The Company's significant accounting policies are discussed in Note 1 – Principal Business Activity and Significant Accounting Policies in the Annual Report. There have been no significant changes to these policies that have had a material impact on the Company's unaudited condensed financial statements and related notes during the three and six months ended June 30, 2023. |
Business Combination
Business Combination | 6 Months Ended |
Jun. 30, 2023 | |
Business Combination and Asset Acquisition [Abstract] | |
Business Combination | Note 2 — Business Combination Rocco & Roxie The Company completed the acquisition of all of the membership units of Rocco & Roxie Supply Co, LLC ("R&R") on January 13, 2023, (the "R&R Acquisition"), which resulted in R&R becoming a wholly owned subsidiary of the Company. The R&R Acquisition expands the Company's brand and product portfolio to include stain and odor products and enables the Company to extend its offerings into premium dog supplements and jerky treats. The Company paid $26.5 million for the membership interests of R&R using cash on hand. The purchase is subject to normal working capital adjustments. The following table summarizes the preliminary allocations of the consideration paid of $27.6 million, which included the $26.5 million purchase price plus $1.1 million of working capital, to the assets acquired and liabilities assumed, based on our current estimates of the fair value at the date of the R&R Acquisition: $'s in 000's Preliminary Estimated Fair Value Adjustments As Retrospectively Adjusted Current assets $ 3,020 $ — $ 3,020 Other assets 1,208 — 1,208 Amortizable intangibles Trade name 7,600 (500) 7,100 Customer relationships 320 — 320 Total amortizable intangibles $ 7,920 $ (500) $ 7,420 Goodwill 20,266 500 20,766 Total assets $ 32,414 $ — $ 32,414 Current liabilities 1,000 — 1,000 Other tax liabilities 3,780 — 3,780 Total liabilities 4,780 — 4,780 Purchase price, net of cash acquired $ 27,634 $ — $ 27,634 Intangible assets will be amortized over the estimated useful lives of the assets through January 2033. The weighted average amortization period of the amortizable intangible assets is approximately 9.9 years. The identifiable intangible assets are measured at fair value as Level III in accordance with the fair value hierarchy. Goodwill represents the future economic benefits that do not qualify for separate recognition and primarily includes the assembled workforce and other non-contractual relationships, as well as expected future synergies. Approximately $19.5 million of the $20.8 million of Goodwill will not be tax deductible, and the remaining balance is expected to be deductible for tax purposes. Goodwill was allocated to the Products segment. Transaction costs of $0.5 million were incurred and are recorded in Selling, General, and Administrative costs on the condensed consolidated statement of operations. The estimate of fair value and purchase price allocation were based on information available at the time of closing the R&R Acquisition. These preliminary estimates are subject to retrospective adjustments during the measurement period, not to exceed one year, based upon new information obtained about facts and circumstances that existed as of the date of closing the R&R Acquisition. The primary areas of the purchase price allocation that are not yet finalized relate to the valuation of identifiable intangible assets, residual goodwill and deferred taxes. |
Debt
Debt | 6 Months Ended |
Jun. 30, 2023 | |
Debt Disclosure [Abstract] | |
Debt | Note 3 — Debt Senior Secured Asset-Based Revolving Credit Facility On April 13, 2021, OpCo entered into an asset-based revolving credit agreement with KeyBank National Association, as administrative agent and collateral agent, and the lenders’ party thereto, that provides revolving credit commitments of $125.0 million, subject to a borrowing base limitation (the "ABL"). The borrowing base for the ABL at any time equals the sum of: (i) 90% of eligible investment-grade accounts receivable; plus (ii) 85% of eligible other accounts receivable; plus, (iii) 85% of the net orderly liquidation value of the cost of certain eligible on-hand and in-transit inventory; plus, (iv) at the option of OpCo, 100% of qualified cash; minus (v) reserves. The ABL bears interest at a variable rate plus a margin, with the variable rate being based on a base rate or LIBOR at the option of the Company. On February 3, 2023, HoldCo and Opco, entered into the First Amendment Agreement to the ABL to replace the interest rate benchmark from LIBOR to Secured Overnight Financing Rate ("SOFR"). The interest rate at June 30, 2023 was 6.31% The Company also pays a commitment fee on unused borrowings at a rate of 0.35%. The ABL Facility is secured by substantially all the assets of HoldCo and its wholly-owned domestic subsidiaries including a first-priority security interest in personal property consisting of accounts receivable, inventory, cash, and deposit accounts (such collateral subject to first-priority security interest, "ABL Priority Collateral"), and a second-priority security interest in all other personal and real property of HoldCo and its wholly-owned domestic subsidiaries (such collateral subject to such second-priority security interest, “Term Priority Collateral”), in each case, subject to customary exceptions. The ABL contains customary representations and warranties, affirmative and negative covenants and events of default, including negative covenants that restrict the ability of HoldCo and its restricted subsidiaries to incur additional indebtedness, pay dividends, make investments, loans, and acquisitions, among other restrictions. As of June 30, 2023, no amounts were outstanding under the ABL. Senior Secured Term Loan Facility - Term Loan B On April 13, 2021, OpCo entered into a term credit and guaranty agreement with Jefferies Finance LLC, as administrative agent and collateral agent, and the lenders’ party thereto, that provides senior secured term loans of $300.0 million (which may be increased in certain circumstances) (the "Term Loan B"). The Term Loan B bears interest at a variable rate of either prime, federal funds effective rate or LIBOR, plus an applicable margin of between 3.25% and 4.25% depending on the underlying base rate. LIBOR rates are subject to a 0.50% floor. The interest rate at June 30, 2023 was 9.46%. The Term Loan B requires quarterly payments of 0.25% of the original principal amount, with the balance due on April 13, 2028. On May 25, 2023, the Term Loan B was amended to replace the interest rate benchmark from the Adjusted Eurodollar Rate to SOFR. The Term Loan B is secured by substantially all the assets of HoldCo and its wholly-owned domestic subsidiaries, including a first-priority security interest in Term Priority Collateral and a second-priority security interest in ABL Priority Collateral, in each case, subject to customary exceptions. The Term Loan B contains customary representations and warranties, affirmative and negative covenants and events of default, including negative covenants that restrict the ability of HoldCo and its restricted subsidiaries to incur additional indebtedness, pay dividends, make investments, loans, and acquisitions, among other restrictions. Convertible Notes On May 19, 2020, the Company issued $143.8 million in aggregate principal amount of 4.00% Convertible Senior Notes due 2026 (the “Notes”) pursuant to the indenture (the “Indenture”), dated as of May 19, 2020. The Notes accrue interest at a rate of 4.00% per annum, payable semi-annually in arrears on June 1 and December 1 of each year, beginning on December 1, 2020. The Notes will mature on June 1, 2026, unless earlier repurchased, redeemed or converted. Before January 15, 2026, holders will have the right to convert their Notes only upon the occurrence of certain events. From and after January 15, 2026, holders may convert their Notes at any time at their election until the close of business on the scheduled trading day immediately before the maturity date. The Company will settle conversions by paying or delivering, as applicable, cash, shares of its Class A common stock, or a combination of cash and shares of its Class A common stock, at its election. The initial conversion rate is 33.7268 shares of Class A common stock per $1,000 principal amount of Notes. The conversion rate and conversion price will be subject to customary adjustments upon the occurrence of certain events. In addition, if certain corporate events that constitute a “Make-Whole Fundamental Change” (as defined in the Indenture) occur, then the conversion rate will, in certain circumstances, be increased for a specified period of time. The following represents the Company’s long-term debt as of: $'s in 000's June 30, 2023 December 31, 2022 Convertible Notes $ 143,750 $ 143,750 Term Loan B 294,000 295,500 Revolving credit facility — — Other debt 17,676 19,690 Net discount on debt and deferred financing fees (7,577) (8,531) $ 447,849 $ 450,409 Less current maturities of long-term debt (7,267) (7,133) Total long-term debt $ 440,582 $ 443,276 Future maturities of long-term debt, excluding the discount on debt and deferred financing fees, as of June 30, 2023, are as follows: ($'s in 000's) Remainder of 2023 $ 3,550 2024 7,426 2025 4,600 2026 147,350 2027 3,600 Thereafter 288,900 |
Intangible Assets and Goodwill
Intangible Assets and Goodwill | 6 Months Ended |
Jun. 30, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets and Goodwill | Note 4 — Intangible Assets and Goodwill Goodwill and non-amortizable intangible assets Intangible assets consist of the following at: $'s in 000's Useful Lives June 30, 2023 December 31, 2022 Amortizable intangibles Certification 7 years $ 350 $ 350 Customer relationships 10-20 years 160,391 160,040 Patents and processes 5-10 years 14,685 14,634 Brand names 5-15 years 31,757 24,633 Total amortizable intangibles 207,183 199,657 Less accumulated amortization (71,240) (62,085) Total net amortizable intangibles 135,943 137,572 Non-amortizable intangibles Trademarks and other 33,239 33,239 In-process research and development — 1,668 Intangible assets, net of accumulated amortization $ 169,182 $ 172,479 Certain intangible assets are denominated in currencies other than the U.S. Dollar; therefore, their gross and net carrying values are subject to foreign currency movements. Amortization expense for the three months ended June 30, 2023 and 2022 was $6.5 million and $4.5 million, respectively. Amortization expense for the six months ended June 30, 2023, and 2022 was $10.7 million and $9.0 million, respectively. During the three months ended June 30, 2023, the Company opted out of the final acquired project included in in-process research and development, effectively abandoning the associated research and development effort. Accordingly, the Company wrote off the associated intangible asset of $1.7 million in the Products segment, the expense for which is included as amortization expense in selling, general and administrative expenses on the condensed consolidated statement of operations. Estimated future amortization expense for each of the following years is as follows: Years ending December 31, ($'s in 000's) Remainder of 2023 $ 8,927 2024 15,665 2025 14,991 2026 14,338 2027 13,671 Thereafter 68,351 The following is a summary of the changes in the carrying value of goodwill for the period from January 1, 2022 to June 30, 2023: Reporting Unit ($'s in 000's) Products Services Total Goodwill as of January 1, 2022 $ 183,846 $ 47,264 $ 231,110 Foreign currency translation (540) — (540) Impairment — (47,264) (47,264) Goodwill as of December 31, 2022 183,306 — 183,306 R&R Acquisition 20,766 — 20,766 Foreign currency translation 132 — 132 Goodwill as of June 30, 2023 $ 204,204 $ — $ 204,204 |
Income Tax
Income Tax | 6 Months Ended |
Jun. 30, 2023 | |
Income Tax Disclosure [Abstract] | |
Income Tax | Note 5 — Income Tax Our effective tax rate from continuing operations was 2.0% and 3.2% for the three and six months ended June 30, 2023, respectively, and 11.4% and 8.5% for the three and six months ended June 30, 2022, respectively, including discrete items. Income tax expense for the three and six months ended June 30, 2023 and 2022 was different than the U.S federal statutory income tax rate of 21% primarily due to the effects of the change in valuation allowance, state taxes, and the foreign rate differential. The Company has assessed the realizability of the net deferred tax assets as of June 30, 2023 and in that analysis has considered the relevant positive and negative evidence available to determine whether it is more likely than not that some portion or all of the deferred income tax assets will not be realized. The realization of the gross deferred tax assets is dependent on several factors, including the generation of sufficient taxable income to realize its deferred tax assets. The Company believes it is more likely than not that the benefit from recorded deferred tax assets will not be realized. In future periods, if we conclude we have future taxable income sufficient to recognize the deferred tax assets, we may reduce or eliminate the valuation allowance. |
Earnings per Share
Earnings per Share | 6 Months Ended |
Jun. 30, 2023 | |
Earnings Per Share [Abstract] | |
Earnings per Share | Note 6 — Earnings per Share Basic and Diluted Earnings per Share Basic earnings per share of Class A common stock is computed by dividing net income available to PetIQ, Inc. by the weighted-average number of shares of Class A common stock outstanding during the period. Diluted earnings per share of Class A common stock is computed by dividing net income available to PetIQ, Inc. by the weighted-average number of shares of Class A common stock outstanding adjusted to give effect to potentially dilutive securities. The following table sets forth reconciliations of the numerators and denominators used to compute basic and diluted earnings per share of Class A common stock: Three months ended June 30, Six months ended June 30, (in 000's, except for per share amounts) 2023 2022 2023 2022 Numerator: Net income $ 9,553 $ 4,678 $ 19,334 $ 7,838 Less: net income attributable to non-controlling interests 85 46 167 75 Net income attributable to PetIQ, Inc. — basic and diluted 9,468 4,632 19,167 7,763 Denominator (1) : Weighted-average shares of Class A common stock outstanding — basic 29,136 29,283 29,083 29,223 Dilutive impact of share-based compensation awards (2) 237 46 135 81 Dilutive effect of conversion of Notes (3) — — — — Weighted-average shares of Class A common stock outstanding — diluted 29,373 29,329 29,218 29,304 Income per share of Class A common stock — basic $ 0.32 $ 0.16 $ 0.66 $ 0.27 Income per share of Class A common stock — diluted $ 0.32 $ 0.16 $ 0.66 $ 0.26 (1) - Shares of the Company’s Class B common stock do not share in the earnings of the Company and are therefore not participating securities. As such, separate presentation of basic and diluted earnings per share of Class B common stock under the two-class method has not been presented. (2) - For the three and six months ended June 30, 2023, 2,134 thousand and 2,199 thousand of outstanding share-based compensation awards were excluded from the computation of diluted earnings per share, as the effect of including those shares would be anti-dilutive. For the three and six months ended June 30, 2022, 2,376 thousand and 2,334 thousand of outstanding share-based compensation awards were excluded from the computation of diluted earnings per share, as the effect of including those shares would be anti-dilutive. |
Stock Based Compensation
Stock Based Compensation | 6 Months Ended |
Jun. 30, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Stock Based Compensation | Note 7 — Stock Based Compensation PetIQ, Inc. Omnibus Incentive Plan The Amended and Restated PetIQ, Inc. Omnibus Incentive Plan, (the “Plan”), provides for the grant of various equity-based incentive awards to directors of the Company, employees, and consultants. The types of equity-based awards that may be granted under the Plan include: stock options, stock appreciation rights ("SARs"), restricted stock, RSUs, and other stock-based awards, up to a total of 5,804,000 shares of Class A common stock issuable under the Plan. As of June 30, 2023 and 2022, 1,227,691 and 1,914,000 shares were available for issuance under the Plan, respectively. All awards issued under the Plan may only be settled in shares of Class A common stock. Shares issued pursuant to awards under the incentive plans are from our authorized but unissued shares. PetIQ, Inc. 2018 Inducement and Retention Stock Plan for CVC Employees The PetIQ, Inc. 2018 Inducement and Retention Stock Plan for CVC Employees (the “Inducement Plan”) provided for the grant of stock options to employees hired in connection with an acquisition in 2018 as employment inducement awards pursuant to NASDAQ Listing Rule 5635(c)(4). The Inducement Plan reserved 800,000 shares of Class A common stock of the Company, of which 760,000 were granted. No further grants may be made under the Inducement Plan. All awards issued under the Inducement Plan may only be settled in shares of Class A common stock. Stock Options The Company awards stock options to certain employees under the Plan and previously issued stock options under the Inducement Plan, which are subject to time-based vesting conditions, typically 25% on each anniversary of the grant date until fully vested. Upon a termination of service relationship by the Company, all unvested options are typically forfeited and the shares of common stock underlying such awards will become available for issuance under the Plan. The maximum contractual term for stock options is 10 years. The fair value of these equity awards is amortized to equity based compensation expense over the vesting period, which totaled $0.4 million and $0.9 million for the three and six months ended June 30, 2023, respectively, and $0.9 million and $2.2 million for the three and six months ended June 30, 2022, respectively. All stock based compensation expense is included in selling, general and administrative expenses based on the role of recipients. The fair value of the stock option awards was determined on the grant dates using the Black-Scholes valuation model based on the following weighted-average assumptions for the period ended June 30, 2022. No options were issued for the period ended June 30, 2023: June 30, 2022 Expected term (years) (1) 6.25 Expected volatility (2) 37.21 % Risk-free interest rate (3) 1.44 % Dividend yield (4) 0.00 % (1) The Company utilized the simplified method to determine the expected term of the stock options since we do not have sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term. (2) The expected volatility assumption was calculated based on a peer group analysis of stock price volatility with a look back period consistent with the expected option term. (3) The risk-free interest rate was based on the U.S. Treasury yield curve in effect at the time of grant, which corresponds to the expected term of the stock options. (4) The Company has not paid and does not anticipate paying a cash dividend on our common stock. As of June 30, 2023, total unrecognized compensation cost related to unvested stock options was $2.6 million and is expected to be recognized over a weighted-average period of 1.5 years. Stock Weighted Aggregate Weighted Outstanding at January 1, 2022 1,768 $ 26.51 $ 2,897 7.3 Granted 83 14.16 Exercised (2) 19.49 $ 10 Forfeited (110) 29.24 Cancelled (86) 31.12 Outstanding at December 31, 2022 1,652 $ 25.48 $ 53 6.2 Forfeited (76) 16.21 Cancelled (46) 31.54 Outstanding at June 30, 2023 1,530 $ 25.73 $ — 5.4 Options exercisable at June 30, 2023 1,302 Restricted Stock Units The Company awards RSUs to certain employees and directors under the Plan, which are subject to time-based vesting conditions. Typically, upon a termination of service relationship by the Company, all unvested RSUs will be forfeited and the shares of common stock underlying such awards will become available for issuance under the Plan. The fair value of RSUs are measured based on the closing fair market value of the Company’s Class A common stock on the date of grant. At June 30, 2023, total unrecognized compensation cost related to unvested RSUs was $24.9 million and is expected to vest over a weighted average period of 3.2 years. The fair value of these equity awards is amortized to equity based compensation expense over the vesting period, which totaled $2.3 million and $4.3 million for the three and six months ended June 30, 2023, and $2.0 million and $4.4 million for the three and six months ended June 30, 2022, respectively. All stock based compensation expense is included in selling, general and administrative expenses based on the role of recipients. The following table summarizes the activity of the Company’s RSUs for the period ended June 30, 2023. Number of Weighted Outstanding at January 1, 2022 459 $ 31.08 Granted 802 20.30 Settled (231) 27.81 Forfeited (177) 25.53 Outstanding at December 31, 2022 853 $ 23.06 Granted 1,081 10.96 Settled (230) 22.69 Forfeited (100) 18.97 Nonvested RSUs at June 30, 2023 1,604 $ 14.94 |
Non-Controlling Interests
Non-Controlling Interests | 6 Months Ended |
Jun. 30, 2023 | |
Noncontrolling Interest [Abstract] | |
Non-Controlling Interests | Note 8 — Non-Controlling Interests The following table presents the outstanding membership interests in HoldCo ("LLC Interests") and changes in LLC Interests for the periods presented. LLC Interests held % of Total $'s in 000's LLC PetIQ, Inc. Total LLC PetIQ, Inc. As of January 1, 2022 272 29,139 29,411 0.9 % 99.1 % Stock based compensation transactions — 188 188 Exchange transactions (20) 20 — Unit redemption — (373) (373) As of December 31, 2022 252 28,974 29,226 0.9 % 99.1 % Stock based compensation transactions — 195 195 Exchange transactions (8) 8 — As of June 30, 2023 244 29,177 29,421 0.8 % 99.2 % Note that certain figures shown in the table above may not recalculate due to rounding. For the three and six months ended June 30, 2023, the Company owned a weighted average of 99.2%, of HoldCo, and for the three and six months ended June 30, 2022 the Company owned a weighted average of 99.1%, respectively. |
Customer Concentration
Customer Concentration | 6 Months Ended |
Jun. 30, 2023 | |
Risks and Uncertainties [Abstract] | |
Customer Concentration | Note 9 — Customer Concentration The Company has significant exposure to customer concentration. During the three and six months ended June 30, 2023 , three and two customers individually accounted for more than 10% of sales, comprising 54% and 42% of net sales in aggregate, respectively for such periods. During the three and six months ended June 30, 2022 three customers individually accounted for more than 10% of sales, comprising 48% and 43% of net sales, respectively for such periods. At June 30, 2023, one Products segment customer individually accounted for more than 10% of outstanding trade receivables, and accounted for 44% of outstanding trade receivables, net. At December 31, 2022, one Products segment customer individually accounted for more than 10% of outstanding trade receivables, and accounted for 46% of outstanding trade receivables, net. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 10 — Commitments and Contingencies Litigation Contingencies The Company records a liability when a particular contingency is probable and estimable and provides disclosure for contingencies that are at least reasonably possible of resulting in a loss including an estimate which we currently cannot make. The Company has not accrued for any contingency as of June 30, 2023 and December 31, 2022 as the Company does not consider any contingency to be probable or estimable. The Company recorded $1.0 million and $3.5 million of expense in the three and six months ended June 30, 2022, respectively, related to a lawsuit brought by a former supplier to the Company related to the redemption of ownership interest, which is included within selling, general and administrative expenses on the condensed consolidated statements of operations. The matter was settled and paid during 2022. Commitments We have commitments for long-term debt that are discussed further in Note - 3, Debt, and leases. In addition, we have purchase obligations for goods and services, capital expenditures, and raw materials entered into in the normal course of business. |
Segments
Segments | 6 Months Ended |
Jun. 30, 2023 | |
Segment Reporting [Abstract] | |
Segments | Note 11 — Segments The Company has two operating segments: Products and Services. The Products segment consists of the Company’s manufacturing and distribution business. The Services segment consists of the Company’s veterinary services and related product sales. The segments are based on the discrete financial information reviewed by the Chief Operating Decision Maker (“CODM”) to make resource allocation decisions and to evaluate performance. We measure and evaluate our reportable segments based on their respective Segment Adjusted EBITDA performance. Beginning in the fourth quarter of 2022, we allocate to our segments capital expenditures and certain costs and expenses, such as accounting, legal, human resources, information technology and corporate headquarters expenses, on a pro rata basis based on net sales to better align with the discrete financial information reviewed by our CODM. Such expenses previously were not allocated to segments. The Company has recast prior periods to give effect to this change. This change in presentation had no impact on the Condensed Consolidated Statements of Operations. Financial information relating to the Company’s operating segments for the three months ended: $'s in 000's Products Services June 30, 2023 Net sales $ 278,167 $ 36,380 Segment Adjusted EBITDA 33,279 1,511 Depreciation expense 1,861 2,303 Capital expenditures 1,275 944 $'s in 000's Products Services June 30, 2022 Net sales $ 219,014 $ 33,000 Segment Adjusted EBITDA 25,531 2,051 Depreciation expense 1,768 1,747 Capital expenditures 1,526 822 Financial information relating to the Company’s operating segments for the six months ended: $'s in 000's Products Services June 30, 2023 Net sales $ 537,160 $ 67,858 Segment Adjusted EBITDA 65,474 2,362 Depreciation expense 3,677 4,008 Capital expenditures 2,839 1,289 $'s in 000's Products Services June 30, 2022 Net sales $ 466,764 $ 60,945 Segment Adjusted EBITDA 55,965 3,212 Depreciation expense 3,696 3,501 Capital expenditures 5,445 2,581 The following table reconciles Segment Adjusted EBITDA to Net income for the periods presented. For the three months ended For the six months ended $'s in 000's June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022 Segment Adjusted EBITDA: Products (1) $ 33,279 $ 25,531 $ 65,474 $ 55,965 Services (1) 1,511 2,051 2,362 3,212 Total 34,790 27,582 67,836 59,177 Adjustments: Depreciation (4,164) (3,515) (7,685) (7,197) Amortization (6,477) (4,477) (10,739) (9,000) Interest (8,824) (6,299) (17,556) (12,420) Acquisition costs (2) (297) (156) (835) (156) Stock based compensation expense (2,743) (2,843) (5,208) (6,666) Non same-store adjustment (3) (1,922) (3,466) (4,245) (10,631) Integration costs (4) (618) (404) (1,594) (743) Litigation expenses — (1,141) — (3,802) Pretax net income $ 9,745 $ 5,281 $ 19,974 $ 8,562 Income tax expense (192) (603) (640) (724) Net income $ 9,553 $ 4,678 $ 19,334 $ 7,838 (1) Beginning in the fourth quarter of 2022, the Company is allocating corporate expenses to each segment pro rata based on net sales for each segment. The presentation of Products Segment Adjusted EBITDA and Services Segment Adjusted EBITDA for the three and six months ended June 30, 2022 has been recast for comparability. For the three and six months ended June 30, 2022, total corporate expenses were $20.5 million, of which $17.8 million was allocated to Products and $2.7 million was allocated to Services, and $39.9 million, of which $35.3 million was allocated to Products and $4.6 million was allocated to Services, respectively. (2) Acquisition costs include legal, accounting, banking, consulting, diligence, and other costs related to completed and contemplated acquisitions. (3) Non same-store adjustment includes revenue and costs, and associated gross profit, related to our Services segment wellness centers and host partners with less than six full quarters of operating results, and also include pre-opening expenses. (4) Integration costs represent costs related to integrating the acquired businesses including personnel costs such as severance and retention bonuses, consulting costs, contract termination, and IT conversion costs. The costs are primarily within the Products segment. Supplemental geographic disclosures are below. Three Months Ended June 30, 2023 $'s in 000's U.S. Foreign Total Product sales $ 276,074 $ 2,093 $ 278,167 Service revenue 36,380 — 36,380 Total net sales $ 312,454 $ 2,093 $ 314,547 Three Months Ended June 30, 2022 $'s in 000's U.S. Foreign Total Product sales $ 217,285 $ 1,729 $ 219,014 Service revenue 33,000 — 33,000 Total net sales $ 250,285 $ 1,729 $ 252,014 Six Months Ended June 30, 2023 $'s in 000's U.S. Foreign Total Product sales $ 534,051 $ 3,109 $ 537,160 Service revenue 67,858 — 67,858 Total net sales $ 601,909 $ 3,109 $ 605,018 Six Months Ended June 30, 2022 $'s in 000's U.S. Foreign Total Product sales $ 462,867 $ 3,897 $ 466,764 Service revenue 60,945 — 60,945 Total net sales $ 523,812 $ 3,897 $ 527,709 Property, plant, and equipment by geographic location is below. June 30, 2023 December 31, 2022 United States $ 65,782 $ 69,376 Europe 3,994 4,019 Total $ 69,776 $ 73,395 |
Related Parties
Related Parties | 6 Months Ended |
Jun. 30, 2023 | |
Related Party Transactions [Abstract] | |
Related Parties | Note 12 — Related Parties Chris Christensen, the brother of CEO, McCord Christensen, acts as the Company’s agent at Moreton Insurance, which acts as a broker for a number of the Company’s insurance policies. The Company’s premium expense, which is generally paid directly to the relevant insurance company, amounted to $6.6 million and $6.9 million for policies that cover the six months ended June 30, 2023 and 2022, respectively. Mr. Chris Christensen earns various forms of compensation based on the specifics of each policy. Katie Turner, the spouse of CEO, McCord Christensen, is the owner of Acadia Investor Relations LLC, (“Acadia”) which acts as the Company’s investor relations consultant. Acadia was paid $0.06 million and $0.1 million for the three and six months ended June 30, 2023 and 2022, respectively. Mike Glasman, the brother of CFO, Zvi Glasman, acted as a broker in connection with the Company's entry into a Master Services Agreement with Syndeo, LLC d/b/a Broadvoice ("Broadvoice") in February 2023 for the provision of certain information technology related services. The amount to be paid to Broadvoice over the 39-month agreement is estimated at $0.4 million. No payments were made in the three and six months ended June 30, 2023. |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Pay vs Performance Disclosure | ||||
Net Income (Loss) Attributable to Parent | $ 9,468 | $ 4,632 | $ 19,167 | $ 7,763 |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Jun. 30, 2023 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
Principal Business Activity a_2
Principal Business Activity and Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2023 | |
Accounting Policies [Abstract] | |
Use of Estimates | Use of Estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of sales and expenses during the reporting period. Actual results could differ from those estimates. Significant items subject to such estimates and assumptions include the useful lives of property, plant, and equipment and intangible assets; the valuation of property, plant, and equipment, intangible assets and goodwill, the valuation of deferred tax assets, the valuation of inventories, and reserves for legal contingencies. |
Business Combination (Tables)
Business Combination (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Business Combination and Asset Acquisition [Abstract] | |
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The following table summarizes the preliminary allocations of the consideration paid of $27.6 million, which included the $26.5 million purchase price plus $1.1 million of working capital, to the assets acquired and liabilities assumed, based on our current estimates of the fair value at the date of the R&R Acquisition: $'s in 000's Preliminary Estimated Fair Value Adjustments As Retrospectively Adjusted Current assets $ 3,020 $ — $ 3,020 Other assets 1,208 — 1,208 Amortizable intangibles Trade name 7,600 (500) 7,100 Customer relationships 320 — 320 Total amortizable intangibles $ 7,920 $ (500) $ 7,420 Goodwill 20,266 500 20,766 Total assets $ 32,414 $ — $ 32,414 Current liabilities 1,000 — 1,000 Other tax liabilities 3,780 — 3,780 Total liabilities 4,780 — 4,780 Purchase price, net of cash acquired $ 27,634 $ — $ 27,634 |
Debt (Tables)
Debt (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Debt Disclosure [Abstract] | |
Schedule of Components of Long Term Debt | The following represents the Company’s long-term debt as of: $'s in 000's June 30, 2023 December 31, 2022 Convertible Notes $ 143,750 $ 143,750 Term Loan B 294,000 295,500 Revolving credit facility — — Other debt 17,676 19,690 Net discount on debt and deferred financing fees (7,577) (8,531) $ 447,849 $ 450,409 Less current maturities of long-term debt (7,267) (7,133) Total long-term debt $ 440,582 $ 443,276 |
Future Maturities of Long-Term Debt, Excluding The Net Discount on Debt, Deferred Financing Fees and Contingent Notes | Future maturities of long-term debt, excluding the discount on debt and deferred financing fees, as of June 30, 2023, are as follows: ($'s in 000's) Remainder of 2023 $ 3,550 2024 7,426 2025 4,600 2026 147,350 2027 3,600 Thereafter 288,900 |
Intangible Assets and Goodwill
Intangible Assets and Goodwill (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Intangible Assets | Intangible assets consist of the following at: $'s in 000's Useful Lives June 30, 2023 December 31, 2022 Amortizable intangibles Certification 7 years $ 350 $ 350 Customer relationships 10-20 years 160,391 160,040 Patents and processes 5-10 years 14,685 14,634 Brand names 5-15 years 31,757 24,633 Total amortizable intangibles 207,183 199,657 Less accumulated amortization (71,240) (62,085) Total net amortizable intangibles 135,943 137,572 Non-amortizable intangibles Trademarks and other 33,239 33,239 In-process research and development — 1,668 Intangible assets, net of accumulated amortization $ 169,182 $ 172,479 |
Estimated Future Amortization Expense | Estimated future amortization expense for each of the following years is as follows: Years ending December 31, ($'s in 000's) Remainder of 2023 $ 8,927 2024 15,665 2025 14,991 2026 14,338 2027 13,671 Thereafter 68,351 |
Schedule of Goodwill | The following is a summary of the changes in the carrying value of goodwill for the period from January 1, 2022 to June 30, 2023: Reporting Unit ($'s in 000's) Products Services Total Goodwill as of January 1, 2022 $ 183,846 $ 47,264 $ 231,110 Foreign currency translation (540) — (540) Impairment — (47,264) (47,264) Goodwill as of December 31, 2022 183,306 — 183,306 R&R Acquisition 20,766 — 20,766 Foreign currency translation 132 — 132 Goodwill as of June 30, 2023 $ 204,204 $ — $ 204,204 |
Earnings per Share (Tables)
Earnings per Share (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Earnings Per Share [Abstract] | |
Reconciliation of Basic and Diluted Earnings per Share | The following table sets forth reconciliations of the numerators and denominators used to compute basic and diluted earnings per share of Class A common stock: Three months ended June 30, Six months ended June 30, (in 000's, except for per share amounts) 2023 2022 2023 2022 Numerator: Net income $ 9,553 $ 4,678 $ 19,334 $ 7,838 Less: net income attributable to non-controlling interests 85 46 167 75 Net income attributable to PetIQ, Inc. — basic and diluted 9,468 4,632 19,167 7,763 Denominator (1) : Weighted-average shares of Class A common stock outstanding — basic 29,136 29,283 29,083 29,223 Dilutive impact of share-based compensation awards (2) 237 46 135 81 Dilutive effect of conversion of Notes (3) — — — — Weighted-average shares of Class A common stock outstanding — diluted 29,373 29,329 29,218 29,304 Income per share of Class A common stock — basic $ 0.32 $ 0.16 $ 0.66 $ 0.27 Income per share of Class A common stock — diluted $ 0.32 $ 0.16 $ 0.66 $ 0.26 (1) - Shares of the Company’s Class B common stock do not share in the earnings of the Company and are therefore not participating securities. As such, separate presentation of basic and diluted earnings per share of Class B common stock under the two-class method has not been presented. (2) - For the three and six months ended June 30, 2023, 2,134 thousand and 2,199 thousand of outstanding share-based compensation awards were excluded from the computation of diluted earnings per share, as the effect of including those shares would be anti-dilutive. For the three and six months ended June 30, 2022, 2,376 thousand and 2,334 thousand of outstanding share-based compensation awards were excluded from the computation of diluted earnings per share, as the effect of including those shares would be anti-dilutive. |
Stock Based Compensation (Table
Stock Based Compensation (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Schedule of Weighted-Average Assumptions | The fair value of the stock option awards was determined on the grant dates using the Black-Scholes valuation model based on the following weighted-average assumptions for the period ended June 30, 2022. No options were issued for the period ended June 30, 2023: June 30, 2022 Expected term (years) (1) 6.25 Expected volatility (2) 37.21 % Risk-free interest rate (3) 1.44 % Dividend yield (4) 0.00 % (1) The Company utilized the simplified method to determine the expected term of the stock options since we do not have sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term. (2) The expected volatility assumption was calculated based on a peer group analysis of stock price volatility with a look back period consistent with the expected option term. (3) The risk-free interest rate was based on the U.S. Treasury yield curve in effect at the time of grant, which corresponds to the expected term of the stock options. (4) The Company has not paid and does not anticipate paying a cash dividend on our common stock. |
Summary of The Activity of The Company's Unvested Stock Options | Stock Weighted Aggregate Weighted Outstanding at January 1, 2022 1,768 $ 26.51 $ 2,897 7.3 Granted 83 14.16 Exercised (2) 19.49 $ 10 Forfeited (110) 29.24 Cancelled (86) 31.12 Outstanding at December 31, 2022 1,652 $ 25.48 $ 53 6.2 Forfeited (76) 16.21 Cancelled (46) 31.54 Outstanding at June 30, 2023 1,530 $ 25.73 $ — 5.4 Options exercisable at June 30, 2023 1,302 |
Summary of RSU Activity | The following table summarizes the activity of the Company’s RSUs for the period ended June 30, 2023. Number of Weighted Outstanding at January 1, 2022 459 $ 31.08 Granted 802 20.30 Settled (231) 27.81 Forfeited (177) 25.53 Outstanding at December 31, 2022 853 $ 23.06 Granted 1,081 10.96 Settled (230) 22.69 Forfeited (100) 18.97 Nonvested RSUs at June 30, 2023 1,604 $ 14.94 |
Non-Controlling Interests (Tabl
Non-Controlling Interests (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Noncontrolling Interest [Abstract] | |
Summary of Noncontrolling Interest | The following table presents the outstanding membership interests in HoldCo ("LLC Interests") and changes in LLC Interests for the periods presented. LLC Interests held % of Total $'s in 000's LLC PetIQ, Inc. Total LLC PetIQ, Inc. As of January 1, 2022 272 29,139 29,411 0.9 % 99.1 % Stock based compensation transactions — 188 188 Exchange transactions (20) 20 — Unit redemption — (373) (373) As of December 31, 2022 252 28,974 29,226 0.9 % 99.1 % Stock based compensation transactions — 195 195 Exchange transactions (8) 8 — As of June 30, 2023 244 29,177 29,421 0.8 % 99.2 % Note that certain figures shown in the table above may not recalculate due to rounding. |
Segments (Tables)
Segments (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Segment Reporting [Abstract] | |
Summary of Financial Information Relating to The Company's Operating Segments | Financial information relating to the Company’s operating segments for the three months ended: $'s in 000's Products Services June 30, 2023 Net sales $ 278,167 $ 36,380 Segment Adjusted EBITDA 33,279 1,511 Depreciation expense 1,861 2,303 Capital expenditures 1,275 944 $'s in 000's Products Services June 30, 2022 Net sales $ 219,014 $ 33,000 Segment Adjusted EBITDA 25,531 2,051 Depreciation expense 1,768 1,747 Capital expenditures 1,526 822 Financial information relating to the Company’s operating segments for the six months ended: $'s in 000's Products Services June 30, 2023 Net sales $ 537,160 $ 67,858 Segment Adjusted EBITDA 65,474 2,362 Depreciation expense 3,677 4,008 Capital expenditures 2,839 1,289 $'s in 000's Products Services June 30, 2022 Net sales $ 466,764 $ 60,945 Segment Adjusted EBITDA 55,965 3,212 Depreciation expense 3,696 3,501 Capital expenditures 5,445 2,581 |
Summary of Segment Adjusted EBITDA to Net Loss Reconciliation | The following table reconciles Segment Adjusted EBITDA to Net income for the periods presented. For the three months ended For the six months ended $'s in 000's June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022 Segment Adjusted EBITDA: Products (1) $ 33,279 $ 25,531 $ 65,474 $ 55,965 Services (1) 1,511 2,051 2,362 3,212 Total 34,790 27,582 67,836 59,177 Adjustments: Depreciation (4,164) (3,515) (7,685) (7,197) Amortization (6,477) (4,477) (10,739) (9,000) Interest (8,824) (6,299) (17,556) (12,420) Acquisition costs (2) (297) (156) (835) (156) Stock based compensation expense (2,743) (2,843) (5,208) (6,666) Non same-store adjustment (3) (1,922) (3,466) (4,245) (10,631) Integration costs (4) (618) (404) (1,594) (743) Litigation expenses — (1,141) — (3,802) Pretax net income $ 9,745 $ 5,281 $ 19,974 $ 8,562 Income tax expense (192) (603) (640) (724) Net income $ 9,553 $ 4,678 $ 19,334 $ 7,838 (1) Beginning in the fourth quarter of 2022, the Company is allocating corporate expenses to each segment pro rata based on net sales for each segment. The presentation of Products Segment Adjusted EBITDA and Services Segment Adjusted EBITDA for the three and six months ended June 30, 2022 has been recast for comparability. For the three and six months ended June 30, 2022, total corporate expenses were $20.5 million, of which $17.8 million was allocated to Products and $2.7 million was allocated to Services, and $39.9 million, of which $35.3 million was allocated to Products and $4.6 million was allocated to Services, respectively. (2) Acquisition costs include legal, accounting, banking, consulting, diligence, and other costs related to completed and contemplated acquisitions. (3) Non same-store adjustment includes revenue and costs, and associated gross profit, related to our Services segment wellness centers and host partners with less than six full quarters of operating results, and also include pre-opening expenses. (4) Integration costs represent costs related to integrating the acquired businesses including personnel costs such as severance and retention bonuses, consulting costs, contract termination, and IT conversion costs. The costs are primarily within the Products segment. |
Long-Lived Assets by Geographic Areas | Supplemental geographic disclosures are below. Three Months Ended June 30, 2023 $'s in 000's U.S. Foreign Total Product sales $ 276,074 $ 2,093 $ 278,167 Service revenue 36,380 — 36,380 Total net sales $ 312,454 $ 2,093 $ 314,547 Three Months Ended June 30, 2022 $'s in 000's U.S. Foreign Total Product sales $ 217,285 $ 1,729 $ 219,014 Service revenue 33,000 — 33,000 Total net sales $ 250,285 $ 1,729 $ 252,014 Six Months Ended June 30, 2023 $'s in 000's U.S. Foreign Total Product sales $ 534,051 $ 3,109 $ 537,160 Service revenue 67,858 — 67,858 Total net sales $ 601,909 $ 3,109 $ 605,018 Six Months Ended June 30, 2022 $'s in 000's U.S. Foreign Total Product sales $ 462,867 $ 3,897 $ 466,764 Service revenue 60,945 — 60,945 Total net sales $ 523,812 $ 3,897 $ 527,709 Property, plant, and equipment by geographic location is below. June 30, 2023 December 31, 2022 United States $ 65,782 $ 69,376 Europe 3,994 4,019 Total $ 69,776 $ 73,395 |
Principal Business Activity a_3
Principal Business Activity and Significant Accounting Policies (Details) | 6 Months Ended |
Jun. 30, 2023 segment distributionCenter location state | |
Accounting Policies [Abstract] | |
Number of points of distribution | distributionCenter | 60,000 |
Number of retail pharmacy locations | location | 2,600 |
Number of states in which the entity provides veterinary services to pet owners | state | 41 |
Number of reportable segments | segment | 2 |
Business Combination - Rocco &
Business Combination - Rocco & Roxie (Details) - USD ($) $ in Thousands | 6 Months Ended | |||
Jan. 13, 2023 | Jun. 30, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Business Acquisition [Line Items] | ||||
Goodwill | $ 204,204 | $ 183,306 | $ 231,110 | |
Rocco & Roxie | ||||
Business Acquisition [Line Items] | ||||
Consideration paid | $ 27,600 | |||
Payments to acquire business | 26,500 | |||
Preliminary working capital | 1,100 | |||
Current assets | 3,020 | |||
Other assets | 1,208 | |||
Amortizable intangibles | 7,420 | |||
Intangibles, Adjustment | (500) | |||
Goodwill | 20,766 | |||
Goodwill, Adjustments | 500 | |||
Total assets | 32,414 | |||
Current liabilities | 1,000 | |||
Other tax liabilities | 3,780 | |||
Total liabilities | 4,780 | |||
Purchase price, net of cash acquired | 27,634 | |||
Weighted average amortization period | 9 years 10 months 24 days | |||
Amount of goodwill not tax deductible | 19,500 | |||
Transaction costs | 500 | |||
Rocco & Roxie | As reported | ||||
Business Acquisition [Line Items] | ||||
Current assets | 3,020 | |||
Other assets | 1,208 | |||
Amortizable intangibles | 7,920 | |||
Goodwill | 20,266 | |||
Total assets | 32,414 | |||
Current liabilities | 1,000 | |||
Other tax liabilities | 3,780 | |||
Total liabilities | 4,780 | |||
Purchase price, net of cash acquired | 27,634 | |||
Trade name | Rocco & Roxie | ||||
Business Acquisition [Line Items] | ||||
Amortizable intangibles | 7,100 | |||
Intangibles, Adjustment | (500) | |||
Trade name | Rocco & Roxie | As reported | ||||
Business Acquisition [Line Items] | ||||
Amortizable intangibles | 7,600 | |||
Customer relationships | Rocco & Roxie | ||||
Business Acquisition [Line Items] | ||||
Amortizable intangibles | 320 | |||
Customer relationships | Rocco & Roxie | As reported | ||||
Business Acquisition [Line Items] | ||||
Amortizable intangibles | $ 320 |
Debt - Narrative (Details)
Debt - Narrative (Details) - USD ($) | Apr. 13, 2021 | Jun. 30, 2023 |
Senior Secured Asset-Based Revolving Credit Facility | ||
Debt | ||
Maximum borrowing capacity | $ 125,000,000 | |
Eligible investment - grade accounts | 90% | |
Percentage of eligible investment other accounts | 85% | |
Percentage of net orderly liquidation value of cost of certain eligible on hand and in transit inventory | 85% | |
Percentage of qualified cash | 100% | |
Line of credit facility, interest rate at period end | 6.31% | |
Unused facility fee (as a percent) | 0.35% | |
Outstanding balance | $ 0 | |
Senior Secured Term Loan Facility | ||
Debt | ||
Maximum borrowing capacity | $ 300,000,000 | |
Line of credit facility, interest rate at period end | 9.46% | |
Floor rate | 0.50% | |
Percentage of periodic payment, principal | 0.25% | |
Senior Secured Term Loan Facility | LIBOR | Minimum | ||
Debt | ||
Variable interest rate, basis points spread over variable reference rate (as a percent) | 3.25% | |
Senior Secured Term Loan Facility | LIBOR | Maximum | ||
Debt | ||
Variable interest rate, basis points spread over variable reference rate (as a percent) | 4.25% |
Debt - Convertible Notes (Detai
Debt - Convertible Notes (Details) - Convertible Notes $ in Millions | May 19, 2020 USD ($) |
Debt | |
Fixed interest rate | 4% |
Class A common stock | |
Debt | |
Aggregate principal amount | $ 143.8 |
Fixed interest rate | 4% |
Conversion ratio | 0.0337268 |
Debt - Long Term Debt Schedule
Debt - Long Term Debt Schedule (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Debt | ||
Other debt | $ 17,676 | $ 19,690 |
Net discount on debt and deferred financing fees | (7,577) | (8,531) |
Long-term debt | 447,849 | 450,409 |
Less current maturities of long-term debt | (7,267) | (7,133) |
Long-term debt, less current installments | 440,582 | 443,276 |
Term Loan B | ||
Debt | ||
Outstanding balance | 294,000 | 295,500 |
Revolving credit facility | ||
Debt | ||
Outstanding balance | 0 | 0 |
Convertible Notes | ||
Debt | ||
Outstanding balance | $ 143,750 | $ 143,750 |
Debt - Future Maturities (Detai
Debt - Future Maturities (Details) $ in Thousands | Jun. 30, 2023 USD ($) |
Future maturities of long-term debt | |
Remainder of 2023 | $ 3,550 |
2024 | 7,426 |
2025 | 4,600 |
2026 | 147,350 |
2027 | 3,600 |
Thereafter | $ 288,900 |
Intangible Assets and Goodwil_2
Intangible Assets and Goodwill - Intangible Assets (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Intangible Assets and Goodwill | ||
Amortizable Intangibles, gross | $ 207,183 | $ 199,657 |
Less accumulated amortization | (71,240) | (62,085) |
Total net amortizable intangibles | 135,943 | 137,572 |
Intangible assets, net of accumulated amortization | 169,182 | 172,479 |
Trademarks and other | ||
Intangible Assets and Goodwill | ||
Non-amortizable intangibles | 33,239 | 33,239 |
In-process research and development | ||
Intangible Assets and Goodwill | ||
Non-amortizable intangibles | $ 0 | 1,668 |
Certification | ||
Intangible Assets and Goodwill | ||
Amortizable intangibles, useful lives | 7 years | |
Amortizable Intangibles, gross | $ 350 | 350 |
Customer relationships | ||
Intangible Assets and Goodwill | ||
Amortizable Intangibles, gross | 160,391 | 160,040 |
Patents and processes | ||
Intangible Assets and Goodwill | ||
Amortizable Intangibles, gross | 14,685 | 14,634 |
Brand names | ||
Intangible Assets and Goodwill | ||
Amortizable Intangibles, gross | $ 31,757 | $ 24,633 |
Minimum | Customer relationships | ||
Intangible Assets and Goodwill | ||
Amortizable intangibles, useful lives | 10 years | |
Minimum | Patents and processes | ||
Intangible Assets and Goodwill | ||
Amortizable intangibles, useful lives | 5 years | |
Minimum | Brand names | ||
Intangible Assets and Goodwill | ||
Amortizable intangibles, useful lives | 5 years | |
Maximum | Customer relationships | ||
Intangible Assets and Goodwill | ||
Amortizable intangibles, useful lives | 20 years | |
Maximum | Patents and processes | ||
Intangible Assets and Goodwill | ||
Amortizable intangibles, useful lives | 10 years | |
Maximum | Brand names | ||
Intangible Assets and Goodwill | ||
Amortizable intangibles, useful lives | 15 years |
Intangible Assets and Goodwil_3
Intangible Assets and Goodwill - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Intangible Assets and Goodwill | ||||
Amortization expense | $ 6,500 | $ 4,500 | $ 10,700 | $ 9,000 |
Write-off of selling, general and administrative expenses | $ 55,159 | $ 50,595 | 98,486 | $ 98,831 |
In-process research and development | ||||
Intangible Assets and Goodwill | ||||
Write-off of selling, general and administrative expenses | $ 1,700 |
Intangible Assets and Goodwil_4
Intangible Assets and Goodwill - Estimated Future Amortization Expense (Details) $ in Thousands | Jun. 30, 2023 USD ($) |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Remainder of 2023 | $ 8,927 |
2024 | 15,665 |
2025 | 14,991 |
2026 | 14,338 |
2027 | 13,671 |
Thereafter | $ 68,351 |
Intangible Assets and Goodwil_5
Intangible Assets and Goodwill - Schedule of Goodwill (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 | Dec. 31, 2022 | |
Goodwill [Roll Forward] | ||
Goodwill, beginning balance | $ 183,306 | $ 231,110 |
Foreign currency translation | 132 | (540) |
Goodwill impairment | (47,264) | |
R&R Acquisition | 20,766 | |
Goodwill, ending balance | 204,204 | 183,306 |
Products | ||
Goodwill [Roll Forward] | ||
Goodwill, beginning balance | 183,306 | 183,846 |
Foreign currency translation | 132 | (540) |
Goodwill impairment | 0 | |
R&R Acquisition | 20,766 | |
Goodwill, ending balance | 204,204 | 183,306 |
Services | ||
Goodwill [Roll Forward] | ||
Goodwill, beginning balance | 0 | 47,264 |
Foreign currency translation | 0 | 0 |
Goodwill impairment | (47,264) | |
R&R Acquisition | 0 | |
Goodwill, ending balance | $ 0 | $ 0 |
Income Tax (Details)
Income Tax (Details) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Income Tax Disclosure [Abstract] | ||||
Effective tax rate | 2% | 11.40% | 3.20% | 8.50% |
Earnings per Share - Reconcilia
Earnings per Share - Reconciliation (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Numerator: | ||||
Net income | $ 9,553 | $ 4,678 | $ 19,334 | $ 7,838 |
Less: net income attributable to non-controlling interests | 85 | 46 | 167 | 75 |
Net income attributable to PetIQ, Inc. | $ 9,468 | $ 4,632 | $ 19,167 | $ 7,763 |
Denominator: | ||||
Weighted-average shares of Class A common stock outstanding -- basic (in shares) | 29,136 | 29,283 | 29,083 | 29,223 |
Dilutive effect of conversion of Notes (in shares) | 0 | 0 | 0 | 0 |
Weighted-average shares of Class A common stock outstanding - diluted (in shares) | 29,373 | 29,329 | 29,218 | 29,304 |
Earnings Per Share | ||||
Income per share of Class A common stock - basic (in dollars per share) | $ 0.32 | $ 0.16 | $ 0.66 | $ 0.27 |
Income per share of Class A common stock - diluted (in dollars per share) | $ 0.32 | $ 0.16 | $ 0.66 | $ 0.26 |
Stock options | ||||
Denominator: | ||||
Dilutive impact of share-based payment awards (in shares) | 237 | 46 | 135 | 81 |
Earnings Per Share - Narrative
Earnings Per Share - Narrative (Details) - shares shares in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Share-Based Payment Arrangement | ||||
Dilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Dilutive shares excluded from computation of diluted earnings per share (in shares) | 2,134 | 2,376 | 2,199 | 2,334 |
Convertible Debt Securities | ||||
Dilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Dilutive shares excluded from computation of diluted earnings per share (in shares) | 4,848 | 4,848 | 4,848 | 4,848 |
Stock Based Compensation - Narr
Stock Based Compensation - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | |
Stock Based Compensation | |||||
Granted (in shares) | 83,000 | ||||
Vesting percentage on each anniversary of the grant date | 25% | ||||
Maximum term for stock options | 6 years 3 months | ||||
Stock based compensation expense | $ 2,743 | $ 2,843 | $ 5,208 | $ 6,666 | |
Unrecognized compensation cost related to unvested stock options | 2,600 | $ 2,600 | |||
Unrecognized compensation cost related to unvested options, recognized weighted-average period | 1 year 6 months | ||||
Stock based compensation expense | $ 2,743 | $ 2,843 | $ 5,208 | $ 6,666 | |
Class A common stock | |||||
Stock Based Compensation | |||||
Number of shares reserved (in shares) | 800,000 | 800,000 | |||
Granted (in shares) | 760,000,000 | ||||
Class A common stock | Omnibus Plan | |||||
Stock Based Compensation | |||||
Shares reserved for future issuance (in shares) | 5,804,000 | 5,804,000 | |||
Share available for issuance (in shares) | 1,227,691 | 1,914,000 | 1,227,691 | 1,914,000 | |
Maximum | |||||
Stock Based Compensation | |||||
Maximum term for stock options | 10 years | ||||
Stock options | |||||
Stock Based Compensation | |||||
Stock based compensation expense | $ 400 | $ 900 | $ 900 | $ 2,200 | |
Stock based compensation expense | 400 | 900 | 900 | 2,200 | |
RSU | |||||
Stock Based Compensation | |||||
Stock based compensation expense | 2,300 | 2,000 | 4,300 | 4,400 | |
Unrecognized compensation cost related to unvested stock options | 24,900 | $ 24,900 | |||
Vesting period | 3 years 2 months 12 days | ||||
Stock based compensation expense | $ 2,300 | $ 2,000 | $ 4,300 | $ 4,400 |
Stock Based Compensation - Weig
Stock Based Compensation - Weighted Average Assumptions (Details) | 6 Months Ended |
Jun. 30, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
Expected term (years) | 6 years 3 months |
Expected volatility | 37.21% |
Risk-free interest rate | 1.44% |
Dividend yield | 0% |
Stock Based Compensation - Summ
Stock Based Compensation - Summary of Unvested Stock Options (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Stock Options (in 000's) | |||
Outstanding - beginning balance (in shares) | 1,652 | 1,768 | |
Granted (in shares) | 83 | ||
Exercised (in shares) | (2) | ||
Forfeited (in shares) | (76) | (110) | |
Cancelled (in shares) | (46) | (86) | |
Outstanding - ending balance (in shares) | 1,530 | 1,652 | 1,768 |
Options exercisable (in shares) | 1,302 | ||
Weighted Average Exercise Price | |||
Beginning balance (in dollars per share) | $ 25.48 | $ 26.51 | |
Granted (in dollars per share) | 14.16 | ||
Exercised (in dollars per share) | 19.49 | ||
Forfeited (in dollars per share) | 16.21 | 29.24 | |
Cancelled (in dollars per share) | 31.54 | 31.12 | |
Ending balance (in dollars per share) | $ 25.73 | $ 25.48 | $ 26.51 |
Aggregate Intrinsic Value | |||
Aggregate intrinsic value of shares outstanding, period start | $ 53 | $ 2,897 | |
Aggregate intrinsic value - exercised | 10 | ||
Aggregate intrinsic value of shares outstanding, period end | $ 0 | $ 53 | $ 2,897 |
Weighted average remaining contractual life (years) | 5 years 4 months 24 days | 6 years 2 months 12 days | 7 years 3 months 18 days |
Stock Based Compensation - Rest
Stock Based Compensation - Restricted Stock (Details) - RSU - $ / shares shares in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 | Dec. 31, 2022 | |
Number of Shares | ||
Beginning balance (in shares) | 853 | 459 |
Granted (in shares) | 1,081 | 802 |
Settled (in shares) | (230) | (231) |
Forfeited (in shares) | (100) | (177) |
Ending balance (in shares) | 1,604 | 853 |
Weighted Average Grant Date Fair Value | ||
Beginning balance (in dollars per share) | $ 23.06 | $ 31.08 |
Granted (in dollars per share) | 10.96 | 20.30 |
Settled (in dollars per share) | 22.69 | 27.81 |
Forfeited (in dollars per share) | 18.97 | 25.53 |
Ending balance (in dollars per share) | $ 14.94 | $ 23.06 |
Non-Controlling Interests (Deta
Non-Controlling Interests (Details) - shares shares in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | |
LLC Owners | ||||||
Noncontrolling Interest [Line Items] | ||||||
Beginning common stock, shares outstanding (in shares) | 252 | 272 | 272 | |||
Stock based compensation transactions (in shares) | 0 | |||||
Exchange transactions (in shares) | (8) | (20) | ||||
Unit redemption (in shares) | 0 | |||||
Ending common stock, shares outstanding (in shares) | 244 | 244 | 252 | |||
Amended Holdco LLC Agreement | ||||||
Noncontrolling Interest [Line Items] | ||||||
Beginning common stock, shares outstanding (in shares) | 29,226 | 29,411 | 29,411 | |||
Stock based compensation transactions (in shares) | 195 | 188 | ||||
Exchange transactions (in shares) | 0 | 0 | ||||
Unit redemption (in shares) | (373) | |||||
Ending common stock, shares outstanding (in shares) | 29,421 | 29,421 | 29,226 | |||
Holdco | ||||||
Noncontrolling Interest [Line Items] | ||||||
Weighted average ownership percentage in Holdco | 99.20% | 99.10% | 99.20% | 99.10% | ||
LLC Owners | ||||||
Noncontrolling Interest [Line Items] | ||||||
Ownership interest by continuing LLC owners | 0.80% | 0.80% | 0.90% | 0.90% | ||
PetIQ, Inc. | ||||||
Noncontrolling Interest [Line Items] | ||||||
Beginning common stock, shares outstanding (in shares) | 28,974 | 29,139 | 29,139 | |||
Stock based compensation transactions (in shares) | 195 | 188 | ||||
Exchange transactions (in shares) | 8 | 20 | ||||
Unit redemption (in shares) | (373) | |||||
Ending common stock, shares outstanding (in shares) | 29,177 | 29,177 | 28,974 | |||
Ownership interest in Holdco | 99.20% | 99.20% | 99.10% | 99.10% |
Customer Concentration (Details
Customer Concentration (Details) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | |
Customer concentrations | Revenue from Contract with Customer, Product and Service Benchmark | Three Customers | |||||
Customer Concentration | |||||
Concentration risk | 54% | 48% | 43% | ||
Customer concentrations | Revenue from Contract with Customer, Product and Service Benchmark | Two Customers | |||||
Customer Concentration | |||||
Concentration risk | 42% | ||||
Credit concentrations | Accounts receivable | One Customer | |||||
Customer Concentration | |||||
Concentration risk | 44% | 46% |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended |
Jun. 30, 2022 | Jun. 30, 2022 | |
Lawsuit By Former Supplier For Redemption Of Ownership Interest | ||
Litigation Contingencies | ||
Loss contingency accrual, provision | $ 1 | $ 3.5 |
Segments - Additional Informati
Segments - Additional Information (Details) | 6 Months Ended |
Jun. 30, 2023 segment | |
Segment Reporting [Abstract] | |
Number of operating segments | 2 |
Segments - Operating Segments (
Segments - Operating Segments (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Segments | ||||
Net sales | $ 314,547 | $ 252,014 | $ 605,018 | $ 527,709 |
Segment Adjusted EBITDA | 34,790 | 27,582 | 67,836 | 59,177 |
Products | ||||
Segments | ||||
Net sales | 278,167 | 219,014 | 537,160 | 466,764 |
Services | ||||
Segments | ||||
Net sales | 36,380 | 33,000 | 67,858 | 60,945 |
Operating Segments | Products | ||||
Segments | ||||
Net sales | 278,167 | 219,014 | 537,160 | 466,764 |
Segment Adjusted EBITDA | 33,279 | 25,531 | 65,474 | 55,965 |
Depreciation expense | 1,861 | 1,768 | 3,677 | 3,696 |
Capital expenditures | 1,275 | 1,526 | 2,839 | 5,445 |
Operating Segments | Services | ||||
Segments | ||||
Net sales | 36,380 | 33,000 | 67,858 | 60,945 |
Segment Adjusted EBITDA | 1,511 | 2,051 | 2,362 | 3,212 |
Depreciation expense | 2,303 | 1,747 | 4,008 | 3,501 |
Capital expenditures | $ 944 | $ 822 | $ 1,289 | $ 2,581 |
Segments - Reconciliation (Deta
Segments - Reconciliation (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||||
Segment Adjusted EBITDA | $ 34,790 | $ 27,582 | $ 67,836 | $ 59,177 |
Depreciation | (4,164) | (3,515) | (7,685) | (7,197) |
Amortization | (6,477) | (4,477) | (10,739) | (9,000) |
Interest | (8,824) | (6,299) | (17,556) | (12,420) |
Acquisition costs | (297) | (156) | (835) | (156) |
Stock based compensation expense | (2,743) | (2,843) | (5,208) | (6,666) |
Non same store adjustment | (1,922) | (3,466) | (4,245) | (10,631) |
Integration costs | (618) | (404) | (1,594) | (743) |
Litigation expenses | 0 | (1,141) | 0 | (3,802) |
Pretax net income | 9,745 | 5,281 | 19,974 | 8,562 |
Income tax expense | (192) | (603) | (640) | (724) |
Net income | 9,553 | 4,678 | 19,334 | 7,838 |
Operating Segments | ||||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||||
Corporate expense | 20,500 | 39,900 | ||
Products | Operating Segments | ||||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||||
Segment Adjusted EBITDA | 33,279 | 25,531 | 65,474 | 55,965 |
Corporate expense | 17,800 | 35,300 | ||
Services | Operating Segments | ||||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||||
Segment Adjusted EBITDA | $ 1,511 | 2,051 | $ 2,362 | 3,212 |
Corporate expense | $ 2,700 | $ 4,600 |
Segments - Supplemental Revenue
Segments - Supplemental Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Segments | ||||
Total net sales | $ 314,547 | $ 252,014 | $ 605,018 | $ 527,709 |
Products | ||||
Segments | ||||
Total net sales | 278,167 | 219,014 | 537,160 | 466,764 |
Services | ||||
Segments | ||||
Total net sales | 36,380 | 33,000 | 67,858 | 60,945 |
U.S. | ||||
Segments | ||||
Total net sales | 312,454 | 250,285 | 601,909 | 523,812 |
U.S. | Products | ||||
Segments | ||||
Total net sales | 276,074 | 217,285 | 534,051 | 462,867 |
U.S. | Services | ||||
Segments | ||||
Total net sales | 36,380 | 33,000 | 67,858 | 60,945 |
Foreign | ||||
Segments | ||||
Total net sales | 2,093 | 1,729 | 3,109 | 3,897 |
Foreign | Products | ||||
Segments | ||||
Total net sales | 2,093 | 1,729 | 3,109 | 3,897 |
Foreign | Services | ||||
Segments | ||||
Total net sales | $ 0 | $ 0 | $ 0 | $ 0 |
Segments - Property, Plant and
Segments - Property, Plant and Equipment by Geographic Location (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Property, plant and equipment, net | $ 69,776 | $ 73,395 |
United States | ||
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Property, plant and equipment, net | 65,782 | 69,376 |
Europe | ||
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Property, plant and equipment, net | $ 3,994 | $ 4,019 |
Related Parties (Details)
Related Parties (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | |
Related Parties | |||||
Amounts due to related party | $ 4,787 | $ 4,787 | $ 1,025 | ||
Insurance Policy Premium Expense | Relevant Insurance Company | |||||
Related Parties | |||||
Amounts paid to related parties | 6,600 | $ 6,900 | |||
Investor Relations Consultant | Acadia Investor Relations L LC | |||||
Related Parties | |||||
Amounts paid to related parties | 60 | $ 100 | $ 100 | ||
Master Services Agreement | Immediate Family Member of Management or Principal Owner | |||||
Related Parties | |||||
Amounts paid to related parties | $ 0 | $ 0 | |||
Term of agreement | 39 months | 39 months | |||
Amounts due to related party | $ 400 | $ 400 |