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8-K - FORM 8-K - OURPETS COv403109_8-k.htm
EX-99.2 - EXHIBIT 99.2 - OURPETS COv403109_ex99-2.htm

Exhibit 99.1

 

 

 

 

FOR IMMEDIATE RELEASE

 

 

OurPet’s Company Reports Record  

2014 Fourth Quarter Net Revenue and Net Income

 

FAIRPORT HARBOR, Ohio – February 26, 2015 – OurPet's Company (OTCQX:OPCO www.ourpets.com), a leading proprietary pet supply company, today reported net revenue increased 9% to a record $6,594,870 for the three months ended December 31, 2014 versus the same period in the prior year. Net income increased by 9% to a quarterly record $409,341 from $375,355 for the fourth quarter 2013. Net income per diluted share was $0.02 for both periods.

 

Dr. Steven Tsengas commented, “Our solid results for the final three months of 2014 were achieved in a difficult operating environment, especially for the retail sector, and represent the Company’s strongest quarterly performance of the year. The top-line growth particularly benefited from further market penetration in the E-Commerce and Food/Drug/Mass retail channels as we continue to implement our dual-brand strategy. Following the re-launch of our SmartScoop® automatic litter box product in the first quarter of 2014, we continue to gain strong market acceptance for this product which contributed to a sales increase of 35% in the waste and odor category compared to the 2013 fourth quarter. Sales in the Company’s core business of cat toys and dog bowls continue to increase and are benefiting from our growing product lines.”

 

Dr. Tsengas added, “We are off to a solid start in the first two months of 2015 as a result of increased momentum across our business portfolio. There are several exciting sales channel opportunities we are pursuing in addition to last week’s announcement regarding plans to acquire certain assets of Molor Products Company that complement our product lines. The Company’s product pipeline continues to emphasize multiple forms of innovation and some of these products will be displayed at the upcoming Global Pet Expo early next month in Orlando, Florida. Following a year of sluggish performance, we are solidly positioned to accelerate our sales and profitability in 2015.”

 

2014 Fourth Quarter Results

Net revenue was $6,594,870 for the 2014 fourth quarter versus $6,027,389 for the same period a year ago with increased sales in all product categories. E-Commerce sales increased 20% while Pet Specialty sales increased 8% and sales in the Food/Drug/Mass retail channel increased 9% over the same period a year ago. Sales of dog products increased 18% over the same period last year led by increased sales of hybrid stainless steel bowls and sales of cat products increased 6% over 2013 fourth quarter.

 

Gross profit was $2,097,861 for the 2014 fourth quarter versus $1,966,007 for the same period last year. The 7% improvement compared to the 2013 fourth quarter was due to increased sales and higher selling prices, partially offset by increased costs of components and increased allowances for excess and slow moving inventory. Gross profit margin for the 2014 fourth quarter was 31.8%, the highest quarterly gross profit margin in 2014, compared to 32.6% for the same period a year ago.

 

 
 

 

Selling, general & administrative (SG&A) expenses increased to $1,482,299 for the 2014 fourth quarter from $1,394,321 last year. A majority of this increase was related to customer specific selling expenses as well as approximately $34,000 in stock option expenses.

 

Income from operations increased to $615,562 for the 2014 fourth quarter from $571,686 a year ago. The $131,854 year-over-year increase in gross profit was partially offset by increased SG&A expenses of $87,978 compared to the 2013 fourth quarter.

 

Income before taxes decreased to $575,625 for the 2014 fourth quarter from $625,089 for the same period in 2013 due to $88,000 of income in the 2013 fourth quarter related to favorable patent litigation and insurance settlements.

 

Income tax expense for the 2014 fourth quarter was $166,284 versus $249,734 a year ago. The decrease was principally due to lower pre-tax income and adjustments to previous estimates of tax owed.

 

Net income was $409,341 for the 2014 fourth quarter compared to $375,355 for the same period last year. Net income per diluted share was $0.02 for the 2014 and 2013 fourth quarter.

 

EBITDA was $766,337 for the 2014 fourth quarter compared to $813,237 a year ago primarily due to lower tax expense versus the same period in 2013. A reconciliation of EBITDA to GAAP net income is provided in an attachment to the summary financial statements.

 

Full-Year 2014 Results

 

Net revenue increased to $22,770,562 for the twelve months ended December 31, 2014, from $21,554,106 for the prior year. The 6% increase in 2014 net revenue was attributable to sales increases of 8% and the new Pet Zone brand launch in the Food/Drug/Mass retail channel and 19% in the E-Commerce channel. Sales of cat products increased approximately 8% compared to 2013 led by increases in catnip consumables and catnip toys/accessories while sales of dog products increased 4% over 2013 principally due to increased sales of hybrid stainless steel bowls. International sales grew approximately 5% for the full-year 2014 compared to 2013.

 

Gross profit increased to $6,810,959 for 2014 compared to $6,678,607 the prior year. The year-over-year increase of $132,352 was principally due to higher sales partially offset by cost of goods sold. Gross profit margin decreased to 29.9% for 2014 from 31.0% a year ago. The decrease in gross profit margin was principally due to higher costs of components, which is currently being addressed through increased selling prices and product mix.

 

SG&A expenses were $5,608,934 for 2014 versus $4,960,802 a year ago. The $648,132 increase was attributable to product investments related to the launch of the company’s dual-brand strategy, business and product development, e-commerce initiatives and targeted marketing and sales plans to increase penetration in key sales channels within domestic and international markets.

 

Income from operations decreased to $1,202,025 for the twelve months ended December 31, 2014, from $1,717,805 for the same period last year due to higher SG&A expenses including increases in customer allowances, payroll and marketing costs.

 

Income before taxes was $1,142,282 for the full-year 2014 versus $1,731,888 in 2013. The year-over-year increase in gross profit was offset by higher SG&A expenses and lower other income compared to the full-year 2013.

 

 
 

 

Income tax expense decreased to $373,007 for 2014 from $660,893 the prior year primarily due to lower pre-tax income.

 

Net income was $769,275 for 2014 compared to $1,070,995 for 2013. Net income per diluted share was $0.04 for the twelve months ended December 31, 2014, versus $.06 per share a year ago.

 

EBITDA was $1,919,993 for the twelve months ended December 31, 2014, versus $2,517,063 for 2013 due to lower net income and lower tax expense versus 2013. 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, February 26, 2015, at 4:30 pm. Eastern Time (ET).  Dr. Steve Tsengas, Chairman and CEO, and Scott Mendes, Chief Financial Officer, will discuss the company’s growth strategy and financial results followed by a question and answer session.  To participate in the conference call, individuals should dial (877) 485-3107.  Phone lines will open at 4:20 p.m. ET.  A digital replay of the investor conference call will be available following the call on the company’s website: www.ourpets.com/investor/investors.html.

 

 

About OurPet's Company
OurPet's Company designs, produces and markets a broad line of innovative, high-quality accessory and consumable pet products in the U.S. and overseas. Investors and customers may visit www.ourpets.com for more information about the Company and its products. The Company's websites include www.ourpets.com and www.petzonebrand.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.

 

 

 

 

CONTACT: INVESTOR RELATIONS:
OurPet’s Company InvestQuest, Inc.
Dr. Steven Tsengas, CEO Robert Lentz
(440) 354-6500 (Ext. 111) (614) 876-1900

 

 

 
 

 

OURPET'S COMPANY AND SUBSIDIARIES
  CONSOLIDATED OPERATING RESULTS

 

   For the Years Ended   For the Quarter Ended 
   December 31,   December 31, 
   2014              2013   2014                2013 
                 
 Net revenue  $22,770,562   $21,554,106   $6,594,870   $6,027,389 
 Cost of goods sold   15,959,603    14,875,499    4,497,009    4,061,382 
           Gross profit on sales   6,810,959    6,678,607    2,097,861    1,966,007 
                     
 Selling, general and administrative expenses   5,608,934    4,960,802    1,482,299    1,394,321 
                     
           Income from operations   1,202,025    1,717,805    615,562    571,686 
                     
 Other (income) and expense, net   (67,028)   (174,655)   10,685    (87,997)
 Interest expense   126,771    160,572    29,252    34,594 
 Income before taxes   1,142,282    1,731,888    575,625    625,089 
                     
 Income tax expense   373,007    660,893    166,284    249,734 
 Net Income  $769,275   $1,070,995   $409,341   $375,355 
                     
                     
   Basic and Diluted Net Income Per Common                          
   Share After Dividend Requirements For Preferred                          
   Stock  $0.04   $0.06   $0.02   $0.02 
                     
 Weighted average number of common shares                          
     outstanding used to calculate                       
     basic earnings per share   17,046,577    16,149,942    17,527,282    16,524,706 
                     
 Weighted average number of common and                         
   equivalent shares outstanding used to calculate                          
   diluted earnings per share   18,159,204    18,256,177    19,856,402    18,951,857 

 

 
 

 

OURPET'S COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

 

   December 31,   December 31, 
    2014   2013 
ASSETS        
   Cash and equivalents  $192,448   $57,975 
   Receivables, net   3,116,448    2,811,139 
   Inventories, net   6,894,115    5,876,724 
   Prepaid expenses   478,593    397,268 
           Total current assets   10,681,604    9,143,106 
           
  LONG TERM ASSETS          
   Property and equipment, net   1,769,548    1,891,209 
   Amortizable Intangible Assets, net   384,063    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   2,700,125    2,808,573 
           
           Total assets  $13,381,729   $11,951,679 
           
 LIABILITIES AND STOCKHOLDERS' EQUITY          
   Notes payable  $-   $100,000 
   Current maturities of long-term debt   601,632    397,575 
   Accounts payable   1,489,982    1,169,925 
   Accrued taxes payable   -    161,637 
   Other Accrued expenses   565,491    699,373 
           Total current liabilities   2,657,105    2,528,510 
           
 LONG TERM LIABILITIES          
   Long-term debt - less current portion above   119,780    721,389 
   Revolving line of credit   2,862,032    1,833,032 
   Deferred income taxes   281,651    245,775 
           Total long term liabilities   3,263,463    2,800,196 
           
           Total liabilities   5,920,568    5,328,706 
           
   Stockholders' Equity   7,461,161    6,622,973 
           
            Total liabilities and stockholders' equity  $13,381,729   $11,951,679 

 

 
 

 

OURPET’S COMPANY

 

EBITDA  Q4'14   Q4'13   Year 2014   Year 2013 
                 
Net Income  $409,341   $375,355   $769,275   $1,070,995 
Interest  $29,252   $34,594   $126,771   $160,572 
Tax Expense  $166,284   $249,734   $373,007   $660,893 
Depreciation  $140,598   $138,205   $571,587   $571,682 
Amortization  $20,862   $15,349   $79,353   $52,921 
    Total EBITDA  $766,337   $813,237   $1,919,993   $2,517,063 

 

 

 

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.