OurPet’s Company Reports Results for 2016 Second Quarter
OurPet's Company (OTCQX: OPCO) (“the Company”) (www.ourpets.com), a leading proprietary pet supply company, today reports its second-quarter results for the
three-month period ended June 30, 2016, which were impacted by a temporary reduction of purchase orders from a major retail
customer clearing out its existing private-label inventory to make room for soon-to-launch OurPet’s branded products.
Second-quarter 2016 revenue decreased 2.7% to $5.4 million compared to $5.6 million for the same period a year ago. Net income
for the 2016 second quarter decreased 41% to $154,634 compared to $262,076 the prior year. Earnings per share remained steady at
$0.01 for the second quarter of 2016 and 2015.
Dr. Steven Tsengas, president and CEO of OurPet’s, says, “While we were disappointed with the decline in revenues and net
income, the decreases are directly attributable to a major pet specialty retailer’s decision to transition out of its private label
stainless steel rubber bonded bowls and toys and accessories, which we previously supplied, to make room in its inventory for
OurPet’s branded products that will be rolled out during Q3 and Q4 of this year. This planned depletion of the customer’s private
label inventory resulted in a temporary OurPet’s revenue disruption of approximately $521,000 for the second quarter of this year.
Had this customer’s inventory reduction not occurred, we believe we would have shown strong revenue growth for the 2nd quarter
instead of the revenue decline and obviously greater sales growth for the first six months of 2016. Overall, we are very pleased
with the growing acceptance of our branded products: ‘OurPet’s’ in the Pet Specialty channel and ‘PetZone’ in the ‘Food, Drug,
Mass’ (FDM) channel. As of June 30, 2016, we had a record order pipeline of approximately $1.9 million with over $1 million of it
from our previously mentioned major pet specialty retailer. Additionally, despite the temporary setback in sales, we were able to
reduce our inventory to less than $7.2 million compared to $8 million at end of 2015. We have used the proceeds to reduce our line
of credit from $3.3 million to $2.4 million.”
Second-quarter net income decreased by $107,442 to $154,634 from $262,076 for the same quarter a year ago. The Company
attributes the decrease to the lower gross profit ($146,000) and increased Selling, General and Administrative expenses of $49,000
primarily related to major new product launches, all of which were offset by a decrease of $104,000 in income tax expense.
Based on historical performance, new products and overall market, the Company anticipates a solid performance in the last six
months of 2016.
“We recently attended the SuperZoo National trade show in Las Vegas where we presented another very strong showing of innovative
products led by our Intelligent Pet Care BlueTooth® line; our Switchgrass Natural Cat Litter™; our newest generation of electronic
cat toys that will simply drive cats wild; and a new very stylish 3-height Store-N-Feed. Due to the seasonal nature of the pet
industry, we typically experience our strongest sales in the second half of the year. We have no reason to believe this year will
be any different,” Dr. Tsengas concludes.
2016 Second-Quarter Results
Net revenue declined 2.7% to $5,436,902 for the 2016 second quarter from $5,586,828 for the same period last year. The decrease
of approximately $150,000 is attributable to a major pet specialty customer clearing out their inventory of private label products
to allow for the purchase of OurPet’s branded products. We also offered additional promotions, discounts and allowances to other
customers switching over to our new brands.
Second-quarter sales for every other channel were up over the same period a year ago with e-commerce up 21%, FDM retail up over
12%, and value retail up over 78%. International sales were down 8.1% primarily due to the strong dollar. With respect to product
categories, sales of toys and accessories were up over 33% over last year’s second quarter as well as waste management and odor
control were up 14%.
Gross profit was down approximately $146,000 to $1,571,844 for the 2016 second quarter compared to $1,718,069 for the period
last year. Gross profit margin decreased 1.9 percentage points to 28.9% for the 2016 second quarter from 30.8% for the same period
a year ago due to a heavier than usual sales mix of slow moving and excess inventory and unfavorable overhead absorption.
Income from operations decreased to $227,702 for the 2016 second quarter from $422,463 a year ago. This approximate $195,000
decrease was primarily due to the lower gross profit combined with about $49,000 in higher Selling, General and Administrative
expenses.
Net income decreased 41% to $154,634 for the 2016 second quarter from $262,076 last year. Earnings per share were $0.01 for the
second quarter of 2016 and 2015.
2016 First Six Months Results
Net revenue increased 3.8% to $11,612,887 for the first half of 2016 from $11,184,150 for the same period a year ago. The
$428,737 year-over-year increase was due to strong first half revenue growth in all channels except for Pet Specialty as noted
above. Food, Drug, Mass increased 11%, E-Commerce increased 17% and Value increased 168%.
Gross profit decreased .3% to $3,403,701 for the first six months of 2016 versus $3,412,414 for the first half of last year due
to the lower sales volume. Gross profit margin decreased 1.2 percentage points to 29.3% for the first six months of 2016 from 30.5%
the prior year due to the same factors that adversely impacted the 2016 second quarter results.
Income from operations decreased 17% to $642,972 for the 2016 first half, which was attributable to lower gross profit and
higher selling, general, and administrative expenses.
Other income increased to $34,468 for the first six months of 2016 from $26,000 for the same period last year.
Income before taxes decreased 18.4% to $616,684 for the first half of 2016 versus $755,474 for the same period a year ago.
Income tax expense was $195,470 for the first six months of 2016 compared to $279,606 the prior year.
Net income for the first six months of 2016 decreased 11.5% to $421,214 from $475,868 for the same period in 2015. Earnings per
share remained at $0.02 for the first six months of both 2016 and 2015.
About OurPet’s Company
OurPet’s Company designs, produces and markets a broad line of innovative, high-quality accessory and consumable pet products in
the U.S. and overseas. Investors and customers may visit www.ourpets.com for more information about our company and its products. OurPet’s websites include www.petzonebrand.com and www.ourpets.com.
Certain of the matters set forth in this press release are forward-looking and involve a number of risks and uncertainties.
Among the factors that could cause actual results to differ materially are the following: business conditions; growth in the
industry; general economic conditions; addition or loss of significant customers; the loss of key personnel; product development;
competition; risks of doing business abroad; foreign government regulations; fluctuations in foreign currency rates; rising costs
for raw materials and sources of supply that may be limited or unavailable from time to time; the timing of orders booked; and the
other risks that are described from time to time in OurPet’s SEC reports.
|
|
|
|
|
|
|
|
|
OURPET'S COMPANY AND SUBSIDIARIES |
CONSOLIDATED OPERATING RESULTS |
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended |
|
For the Six Months Ended |
|
|
June 30, |
|
June 30, |
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
|
|
Net revenue |
|
$ 5,436,902 |
|
$ 5,586,828 |
|
$ 11,612,887 |
|
$ 11,184,150 |
Cost of goods sold |
|
3,865,058 |
|
3,868,759 |
|
8,209,186 |
|
7,771,736 |
Gross profit on sales |
|
1,571,844 |
|
1,718,069 |
|
3,403,701 |
|
3,412,414 |
|
|
|
|
|
|
|
|
|
Selling, general and administrative expenses |
|
1,344,142 |
|
1,295,606 |
|
2,760,729 |
|
2,633,638 |
|
|
|
|
|
|
|
|
|
Income from operations |
|
227,702 |
|
422,463 |
|
642,972 |
|
778,776 |
|
|
|
|
|
|
|
|
|
Other income |
|
(7,463) |
|
(21,277) |
|
(34,468) |
|
(26,000) |
Interest expense |
|
27,920 |
|
24,795 |
|
60,756 |
|
49,302 |
Income before taxes |
|
207,245 |
|
418,945 |
|
616,684 |
|
755,474 |
|
|
|
|
|
|
|
|
|
Income Tax expense |
|
52,611 |
|
156,869 |
|
195,470 |
|
279,606 |
Net Income |
|
$ 154,634 |
|
$ 262,076 |
|
$ 421,214 |
|
$ 475,868 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and Diluted Net Income Per Common |
|
|
|
|
|
|
|
|
Share After Dividend Requirements For Preferred |
|
|
|
|
|
|
|
|
Stock |
|
$ 0.01 |
|
$ 0.01 |
|
$ 0.02 |
|
$ 0.02 |
|
|
|
|
|
|
|
|
|
Weighted average number of common shares |
|
|
|
|
|
|
|
|
outstanding used to calculate |
|
17,657,516 |
|
17,558,838 |
|
17,643,936 |
|
17,555,973 |
basic earnings per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common and |
|
|
|
|
|
|
|
|
equivalent shares outstanding used to |
|
18,277,335 |
|
19,201,418 |
|
18,250,885 |
|
19,172,847 |
calculate diluted earnings per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
OURPET'S COMPANY AND SUBSIDIARIES |
CONSOLIDATED BALANCE SHEETS |
|
|
|
|
|
|
|
June 30, |
|
December 31, |
|
|
|
2016 |
|
|
2015 |
ASSETS |
|
|
|
|
Cash and equivalents |
|
$ |
168,635 |
|
$ |
100,000 |
Receivables, net |
|
|
3,325,003 |
|
|
4,294,810 |
Inventories, net |
|
|
7,181,216 |
|
|
7,914,613 |
Prepaid expenses |
|
|
645,076 |
|
|
582,676 |
Total current assets |
|
|
11,319,930 |
|
|
12,892,099 |
|
|
|
|
|
LONG TERM ASSETS |
|
|
|
|
Property and equipment, net |
|
|
1,962,490 |
|
|
1,873,260 |
Amortizable Intangible Assets, net |
|
|
375,792 |
|
|
357,341 |
Intangible Assets |
|
|
461,000 |
|
|
461,000 |
Goodwill |
|
|
67,511 |
|
|
67,511 |
Deposits and Other assets |
|
|
18,003 |
|
|
18,003 |
Total long term assets |
|
|
2,884,796 |
|
|
2,777,115 |
|
|
|
|
|
Total assets |
|
$ |
14,204,726 |
|
$ |
15,669,214 |
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
Current maturities of long-term debt |
|
|
248,153 |
|
|
276,890 |
Accounts payable |
|
|
716,122 |
|
|
1,582,849 |
Accrued expenses |
|
|
531,200 |
|
|
571,858 |
Total current liabilities |
|
|
1,495,475 |
|
|
2,431,597 |
|
|
|
|
|
LONG TERM LIABILITIES |
|
|
|
|
Long-term debt - less current portion above |
|
|
759,794 |
|
|
876,248 |
Revolving line of credit |
|
|
2,405,032 |
|
|
3,267,170 |
Deferred income taxes |
|
|
320,955 |
|
|
333,834 |
Total long term liabilities |
|
|
3,485,781 |
|
|
4,477,252 |
|
|
|
|
|
Total liabilities |
|
|
4,981,256 |
|
|
6,908,849 |
|
|
|
|
|
Stockholders' Equity |
|
|
9,223,470 |
|
|
8,760,365 |
|
|
|
|
|
Total liabilities and stockholders' equity |
|
$ |
14,204,726 |
|
$ |
15,669,214 |
OurPet’s Company
Dr. Steven Tsengas, CEO, 440-343-6500, x111
or
Investor Relations
Dream Team.
Michael McCarthy, 512-758-8877
View source version on businesswire.com: http://www.businesswire.com/news/home/20160805005025/en/