SOURCE: The OurPets Co.

The OurPets Co.

August 03, 2015 16:05 ET

OurPet's Company Reports Results for 2015 Second Quarter

Record Second Quarter Net Revenue of $5.6 Million; Net Income Up 77% to $262,076

FAIRPORT HARBOR, OH--(Marketwired - August 03, 2015) - OurPet's Company (OTCQB: OPCO) (www.ourpets.com), a leading proprietary pet supply company, today reported second quarter revenue increased 4% to a record $5,586,828 for the three months ended June 30, 2015 from $5,360,210 for the same period a year ago. Net income for the 2015 second quarter increased 77% to $262,076 compared to $147,755 the prior year. Diluted net income per share was $0.01 for the second quarter of 2015 and 2014.

Dr. Steven Tsengas, President and CEO, said, "We are encouraged with our results for the second quarter which included record net revenue, increased margins and further progress implementing our dual-brand strategy. All of this was achieved in the midst of a sluggish economy. Sales in Pet Specialty were particularly strong and benefited from recently introduced bowl designs, new cat toys and accessories. The outlook for E-commerce sales remains bright despite a temporary setback in the 2015 second quarter. Sales in the Grocery, Drug, and Mass channel are expected to benefit from the continued roll-out of the PetZone brand coupled with introduction of new products and targeted efforts to expand the retail base."

Dr. Tsengas continued, "We're excited about our growth opportunities in the second half of this year. Several new and exciting proprietary products will be shipped to customers beginning later this month. We also continue to further strengthen our product portfolio through aggressive development of innovative products in each of our key categories: toys/accessories, bowls/feeders and feline waste management. We received very positive feedback from buyers last month at SuperZoo -- the national show for pet retailers. We also received the coveted '1st Place Award for New Cat Products' at SuperZoo. Three proprietary, game-changing products are being developed for the feline waste management category that we expect to release during the first half of 2016."

2015 Second Quarter Results
Net revenue increased 4% to a record $5,586,828 for the 2015 second quarter versus the same period last year. The $227,000 increase was attributable to strong sales in the Pet Specialty channel partially offset by a slight decrease in the Food, Drug and Mass channel and lower E-Commerce sales.

Gross Profit was $1,718,069 for the 2015 second quarter compared to $1,518,445 the prior year. Gross profit margin increased 2.5 percentage points to 30.8% for the 2015 second quarter from 28.3% for the same period a year ago due to continuous improvement initiatives, price increases, and product mix.

Income from operations increased to $422,463 for the 2015 second quarter from $192,758 a year ago. This increase was primarily due to higher gross profit and also benefited from lower selling, general, and administrative expenses.

Other income for the 2015 second quarter decreased to $21,277 from $61,232 a year ago due to a higher amount of patent infringement settlements the prior year.

Income before taxes increased 87% to $418,945 for the 2015 second quarter versus the same period a year ago.

Income tax expense for the 2015 second quarter more than doubled to $156,869 from $75,708 a year ago.

Net income increased 77% to $262,076 for the 2015 second quarter from $147,755 last year. Net income per diluted share was $0.01 for the second quarter of 2015 and 2014.

EBITDA was $625,984 for the 2015 second quarter versus $426,753 a year ago. A reconciliation of EBITDA to GAAP net income is provided in an attachment to the summary financial statements.

2015 First Six Months Results
Net revenue increased 6% to $11,184,150 for the first half of 2015. The year-over-year increase was due to strong Pet Specialty sales plus higher sales in the Grocery, Drug and Mass channel.

Gross profit increased 11% to $3,412,414 for the first six months of 2015 versus the prior year. Gross profit margin increased 1.4 percentage points to 30.5% for the first six months of 2015 from 29.1% the prior year due to the same factors that benefited the 2015 second quarter results.

Income from operations increased 80% to $778,776 for the 2015 first half, which was attributable to higher gross profit and lower selling, general, and administrative expenses.

Other income decreased to $26,000 for the first six months of 2015 from $71,662 for the same period last year due to a greater amount of patent infringement settlements in 2014.

Income before taxes increased 72% to $755,474 for the first half of 2015 versus the same period a year ago.

Income tax expense was $279,606 for the first six months of 2015 compared to $156,808 the prior year.

Net income for the first six months of 2015 increased 69% to $475,868 from $282,184 for the same period in 2014. Net income per share increased to $0.02 for the first six months of 2015 from $.01 last year.

EBITDA increased 40% to $1,158,994 the first half of 2015 compared to $830,516 the prior year. A reconciliation of EBITDA to GAAP Net Income is provided in an attachment to the summary financial statements.

Investor Conference Call
OurPet's Company has scheduled an investor conference call for Monday, August 3, 2015, at 4:30 pm. Eastern Time (ET). Dr. Steve Tsengas, Chairman and CEO, and Scott Mendes, Chief Financial Officer, will discuss the company's growth strategy and financial results followed by a question and answer session. To participate in the conference call, individuals should dial (877) 485-3107. Phone lines will open at 4:20 p.m. ET. A digital replay of the investor conference call will be available following the call on the company's website: www.ourpets.com/investor/investors.html.

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

Certain of the matters set forth in this press release are forward-looking and involve a number of risks and uncertainties. Among the factors that could cause actual results to differ materially are the following: business conditions; growth in the industry; general economic conditions; addition or loss of significant customers; the loss of key personnel; product development; competition; risks of doing business abroad; foreign government regulations; fluctuations in foreign currency rates; rising costs for raw materials and sources of supply that may be limited or unavailable from time to time; the timing of orders booked; and the other risks that are described from time to time in OurPet's SEC reports.

 
 
OURPET'S COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
       
       
   June 30,  December 31,
   2015  2014
   (unaudited)   
ASSETS        
         
CURRENT ASSETS        
 Cash and cash equivalents  $38,400  $192,448
 Accounts receivable - trade, less allowance for doubtful accounts of $37,824 and $39,539   3,507,030   3,116,448
 Inventories net of reserve   8,047,370   6,894,115
 Prepaid expenses   470,833   478,593
  Total current assets   12,063,633   10,681,604
         
PROPERTY AND EQUIPMENT        
 Computers and office equipment   974,857   883,163
 Warehouse equipment   581,974   567,816
 Leasehold improvements   289,217   276,952
 Tooling   4,207,203   3,885,401
 Construction in progress   216,000   157,031
  Total   6,269,251   5,770,363
 Less accumulated depreciation   4,314,660   4,000,815
  Net property and equipment   1,954,591   1,769,548
         
OTHER ASSETS        
 Amortizable Intangible Assets, less amortization of $457,722 and $417,349   366,632   384,063
 Intangible Assets   461,000   461,000
 Goodwill   67,511   67,511
 Deposits and other assets   18,003   18,003
  Total other assets   913,146   930,577
         
  Total assets  $14,931,370  $13,381,729
         
         
         
         
The accompanying notes are an integral part of the consolidated financial statements.

      
      
      
OURPET'S COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (CONTINUED)
      
      
  June 30,  December 31,
  2015  2014
  (unaudited)   
LIABILITIES       
        
CURRENT LIABILITIES       
 Current maturities of long-term debt $520,420  $601,632
 Accounts payable - trade  1,885,647   1,489,982
 Other accrued expenses  621,607   565,491
  Total current liabilities  3,027,674   2,657,105
        
LONG-TERM LIABILITIES       
 Long-term debt - less current portion above  160,708   119,780
 Revolving Line of Credit  3,567,032   2,862,032
 Deferred Income Taxes  226,927   281,651
  Total long term liabilities  3,954,667   3,263,463
        
  Total liabilities  6,982,341   5,920,568
        
STOCKHOLDERS' EQUITY       
COMMON STOCK       
 No par value; 50,000,000 shares authorized, 17,562,239 and 17,553,007shares issued and outstanding at June 30, 2015 and December 31, 2014respectively  5,031,766   5,031,766
        
CONVERTIBLE PREFERRED STOCK       
 No par value; convertible into Common Stock at the rate of 10 common shares for each preferred share; 4,825,000 shares authorized, 63,500 shares issued and outstanding at June 30, 2015 and December 31, 2014 respectively  579,850   579,850
        
 Series 2009 no par value; convertible into Common Stock at the rate of 10 common shares for each preferred share; 175,000 shares authorized,123,616 shares issued and outstanding at June 30, 2015 and December 31, 2014  865,312   865,312
        
PAID-IN CAPITAL  65,307   53,307
        
ACCUMULATED EARNINGS  1,406,794   930,926
  Total stockholders' equity  7,949,029   7,461,161
        
  Total liabilities and stockholders' equity $14,931,370  $13,381,729
        
        
The accompanying notes are an integral part of the consolidated financial statements.
             
             
                  
OURPET'S COMPANY AND SUBSIDIARIES      
CONSOLIDATED STATEMENTS OF OPERATIONS       
                  
                  
                  
   For the Three Months Ended June 30,   For the Six Months Ended June 30,  
   2015   2014   2015   2014  
                      
                      
Net revenue  $5,586,828   $5,360,210   $11,184,150   $10,574,681  
                      
Cost of goods sold   3,868,759    3,841,765    7,771,736    7,502,334  
                      
Gross profit on sales   1,718,069    1,518,445    3,412,414    3,072,347  
                      
Selling, general and administrative expenses   1,295,606    1,325,687    2,633,638    2,638,651  
                      
Income from operations   422,463    192,758    778,776    433,696  
                      
Other income   (21,277 )  (61,232 )  (26,000 )  (71,662 )
Interest expense   24,795    30,527    49,302    66,366  
                      
Income before income taxes   418,945    223,463    755,474    438,992  
                      
Income tax expense   156,869    75,708    279,606    156,808  
                      
Net income  $262,076   $147,755   $475,868   $282,184  
                      
                      
Basic and Diluted Earnings Per Common ShareAfter Dividend Requirements For PreferredStock:                     
 Net Income  $0.01    0.01   $0.02   $0.01  
                      
                      
Weighted average number of common sharesoutstanding used to calculatebasic earnings per share   
17,558,838
   
16,897,781
   
17,555,973
   
16,798,259
 
                      
Weighted average number of common andequivalent shares outstanding used tocalculate diluted earnings per share   
19,201,418
   
18,205,549
   
19,172,847
   
18,244,626
 
                      
                      
The accompanying notes are an integral part of the consolidated financial statements.          
                      
                      
                 
OURPET'S COMPANY AND SUBSIDIARIES
 
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
 
FOR THE SIX MONTHS ENDED JUNE 30, 2015

                            
   Preferred Stock  Series 2009 Preferred Stock  Common Stock        Total
   Number of     Number of     Number of     Paid-In  Accumulated  Stockholders'
   Shares  Amount  Shares  Amount  Shares  Amount  Capital  Earnings  Equity
                                  
                                  
Balance at December 31, 2014  63,500  $579,850  123,616  $865,312  17,553,007  $5,031,766  $53,307  $930,926  $7,461,161
                                  
Common Stock issued upon exercise of                                 
stock options                9,232                
Net income                            475,868   475,868
Stock-Based compensation expense                        12,000       12,000
                                  
Balance at June 30, 2015 (unaudited)  63,500  $579,850  123,616  $865,312  17,562,239  $5,031,766  $65,307  $1,406,794  $7,949,029
  
  
  
OURPET'S COMPANY AND SUBSIDIARIES  
CONSOLIDATED STATEMENTS OF CASH FLOWS  
          
          
   For the Six Months Ended  
   June 30,  
   2015   2014  
CASH FLOWS FROM OPERATING ACTIVITIES           
 Net income  $475,868   $282,184  
 Adjustments to reconcile net income to net cash provided by operating activities:           
  Loss on Fixed Assets Written Off   6,638    -  
  Depreciation expense   313,846    287,011  
  Amortization expense   40,372    38,147  
  Stock option expense   12,000    6,000  
  (Increase) decrease in assets:           
   Accounts receivable - trade   (390,582 )  (220,866 )
   Inventories   (1,153,255 )  (1,345,359 )
   Prepaid expenses   7,760    (66,667 )
   Amortizable Intangible Asset Additions   (22,940 )  (37,450 )
  Increase (decrease) in liabilities:           
   Accounts payable - trade   395,665    939,913  
   Accrued expenses   56,116    (409,420 )
   Deferred tax liabilities   (54,724 )  (34,892 )
    Net cash used in operating activities   (313,236 )  (561,399 )
            
CASH FLOWS FROM INVESTING ACTIVITIES           
 Acquisition of property and equipment   (420,528 )  (360,772 )
  Net cash used in investing activities   (420,528 )  (360,772 )
            
CASH FLOWS FROM FINANCING ACTIVITIES           
 Principal payments on long-term debt   (125,284 )  (273,307 )
 Net borrowing on bank line of credit   705,000    1,334,000  
  Net cash provided by financing activities   579,716    1,060,693  
  Net increase (decrease) in cash   (154,048 )  138,522  
            
CASH AT BEGINNING OF PERIOD   192,448    57,975  
CASH AT END OF PERIOD  $38,400   $196,497  
            
            
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION           
 Interest paid  $38,722   $57,521  
 Income taxes paid  $256,000   $320,500  
            
SUPPLEMENTAL DISCLOSURE OF NON CASH TRANSACTIONS           
 Non cash exercise of stock options/ warrants  $6,933   $232,645  
 Tooling Obtained through Asset Purchase  $85,000       
            
The accompanying notes are an integral part of the consolidated financial statements.  
            
   
            
               Exhibit 11  
                  
OURPET'S COMPANY AND SUBSIDIARIES  
                  
STATEMENT OF COMPUTATION OF NET INCOME PER SHARE  
                  
                  
                  
   For the Three Months Ended   For the Six Months Ended  
   June 30,   June 30,  
   2015   2014   2015   2014  
                      
Net income  $262,076   $147,755   $475,868   $282,184  
                      
Preferred Stock dividend requirements   (11,399 )  (27,826 )  (22,672 )  (55,346 )
                      
Net income attributable to common stockholders  $250,677   $119,929   $453,196   $226,838  
                      
Basic weighted average number of common shares outstanding   17,558,838    16,897,781    17,555,973    16,798,259  
                      
Preferred Stock Common Share Equivalents   1,236,160         1,236,160       
                      
Dilutive Stock Options outstanding for the Period   104,772    586,293    57,958    692,864  
                      
Dilutive Warrants outstanding for the Period   301,649    721,475    322,755    753,503  
                      
Diluted Weighted average number of common and equivalent shares outstanding   19,201,418    18,205,549    19,172,847    18,244,626  
                      
Basic and Diluted Net income per common share  $0.01   $0.01   $0.02   $0.01  
  
  
  
OURPET'S COMPANY AND SUBSIDIARIES  
CONSOLIDATED OPERATING RESULTS  
                  
   For the Three Months Ended   For the Six Months Ended  
   June 30,   June 30,  
   2015  2014   2015  2014  
                      
Net revenue  $5,586,828   $5,360,210   $11,184,150   $10,574,681  
Cost of goods sold   3,868,759    3,841,765    7,771,736    7,502,334  
  Gross profit on sales   1,718,069    1,518,445    3,412,414    3,072,347  
                      
Selling, general and administrative expenses   1,295,606    1,325,687    2,633,638    2,638,651  
                      
  Income from operations   422,463    192,758    778,776    433,696  
                      
Other income   (21,277 )  (61,232 )  (26,000 )  (71,662 )
Interest expense   24,795    30,527    49,302    66,366  
Income before taxes   418,945    223,463    755,474    438,992  
                      
Income Tax expense   156,869    75,708    279,606    156,808  
Net Income  $262,076   $147,755   $475,868   $282,184  
                      
                      
Basic and Diluted Net Income Per CommonShare After Dividend Requirements For PreferredStock  $

0.01
  $

0.01
  $

0.02
  $

0.01
 
                      
Weighted average number of common sharesoutstanding used to calculatebasic earnings per share   
17,558,838
   
16,897,781
   
17,555,973
   
16,798,259
 
                      
Weighted average number of common andequivalent shares outstanding used tocalculate diluted earnings per share   
19,201,418
   
18,205,549
   
19,172,847
   
18,244,626
 
                      
                 
                      
OURPET'S COMPANY AND SUBSIDIARIES            
CONSOLIDATED BALANCE SHEETS            
                      
   June 30,   December 31,            
   2015   2014            
ASSETS                     
 Cash and equivalents  $38,400   $192,448            
 Receivables, net   3,507,030    3,116,448            
 Inventories, net   8,047,370    6,894,115            
 Prepaid expenses   470,833    478,593            
  Total current assets   12,063,633    10,681,604            
                      
LONG TERM ASSETS                     
 Property and equipment, net   1,954,591    1,769,548            
 Amortizable Intangible Assets, net   366,632    384,063            
 Intangible Assets   461,000    461,000            
 Goodwill   67,511    67,511            
 Deposits and Other assets   18,003    18,003            
  Total long term assets   2,867,737    2,700,125            
                      
  Total assets  $14,931,370   $13,381,729            
                      
LIABILITIES AND STOCKHOLDERS' EQUITY                     
 Current maturities of long-term debt   520,420    601,632            
 Accounts payable   1,885,647    1,489,982            
 Accrued expenses   621,607    565,491            
  Total current liabilities   3,027,674    2,657,105            
                      
LONG TERM LIABILITIES                     
 Long-term debt - less current portion above   160,708    119,780            
 Revolving line of credit   3,567,032    2,862,032            
 Deferred income taxes   226,927    281,651            
  Total long term liabilities   3,954,667    3,263,463            
                      
  Total liabilities   6,982,341    5,920,568            
                      
 Stockholders' Equity   7,949,029    7,461,161            
                      
  Total liabilities and stockholders' equity  $14,931,370   $13,381,729            
                      
                 
EBITDA  Q2'15  Q2'14  1st six months 2015  1st six months 2014
                 
Net Income  $262,076  $147,755  $475,868  $282,184
Interest   24,795   30,527   49,302   66,366
Tax Expense   156,869   75,708   279,606   156,808
Depreciation   161,966   153,326   313,846   287,011
Amortization   20,278   19,437   40,372   38,147
 Total EBITDA  $625,984  $426,753  $1,158,994  $830,516

The above table reconciles the Company’s disclosure of Net Income per GAAP with the non GAAP financial measure EBITDA (Earnings before Interest, Taxes, Depreciation and Amortization.) As the investment community has often requested the EBITDA calculation to help them evaluate performance, Management has chosen to provide this disclosure. Although EBITDA is widely used in the investment community as a benchmark to reflect operating performance, financing capability and liquidity, it is not regarded as a measure of operating performance and liquidity under generally accepted accounting principles (“GAAP”). It also does not represent cash flows from operating activities. In addition, the Company’s EBITDA may not be comparable to similar indicators provided by other companies. The Presentation of this additional information is not meant to be considered in isolation or as a substitute for net income (loss), or any component thereof, in accordance with GAAP.

Contact Information

  • For further information, contact:

    CONTACTS
    OurPet's Company
    Dr. Steven Tsengas
    CEO
    (440) 343-6500, x111

    INVESTOR RELATIONS
    InvestQuest, Inc.
    Robert Lentz
    (614) 876-1900