The OurPet's Company Reports 2014 First Quarter Results

FAIRPORT HARBOR, Ohio, April 24, 2014 /PRNewswire/ -- The OurPet's Company (OTCBB: OPCO), (www.ourpets.com), a leading proprietary pet supply company, today reported 2014 first quarter  net revenue increased 3.5% to $5,214,471 from $5,040,645 for the same period last year.  In addition to adverse weather conditions, higher than budgeted costs related to entry into the private label-value brand market and increased promotions contributed to a decline in income from operations for the 2014 first quarter versus the prior year.  Net income was $134,427 for the 2014 first quarter compared to $223,601 a year ago.  Earnings per diluted share were $0.01 for the first quarter of 2014 and 2013.

Dr. Steven Tsengas, Chairman and CEO, commented, "Our results for the 2014 first quarter were below expectations due to factors that had a temporary adverse impact on financial performance.  We remain optimistic that our 2014 full-year results will achieve record net revenue and record earnings per share.  The severe weather conditions we faced during the first three months of 2014 have recently subsided which has also benefited consumer spending, especially by customers at our largest accounts.  We are accelerating plans to implement the company's dual brand growth strategy during the remainder of 2014."

Dr. Tsengas added, "We have made substantial investments in the roll-out of our dual brand strategy, which include increased business and product development plus higher selling and marketing expenses in order to penetrate key markets in the United States and overseas.  Shipments of PetZone® branded products to Food, Mass and Drug customers are expected later this quarter.  We further expanded our presence in this market with the addition of new customers in the recently completed quarter.  Sales of feline waste and odor control products declined compared to the 2013 first quarter due to temporary timing issues related to the launch of the expanded line of SmartScoop® products.  Branded products offered through E-Commerce continued to achieve solid year-over-year sales gains.  Interest from current and prospective customers at last month's Global Pet Expo in new products and the company's dual brand strategy further strengthen the outlook for 2014."        

2014 First Quarter Results

Net revenue increased 3.5% to $5,214,471 for the three months ended March 31, 2014, from $5,040,645 for the same period a year ago.  Sales increases in the Food Drug & Mass and E-Commerce markets were partly offset by decreased sales of Pet Specialty products.

Gross profit increased 6.7% to $1,553,901 for the 2014 first quarter from $1,456,371 a year ago.  This $97,530 increase in gross profit was primarily attributable to higher sales and lower fixed operating costs versus the 2013 first quarter.  Bad weather, promotional sales and some higher than planned costs to enter the private label value market were the principal factors that adversely impacted gross profit for the 2014 first quarter compared to the same period last year.  Gross profit margin increased to 29.8% for the 2014 first quarter from 28.9% for the same quarter a year ago.

Income from operations was $240,936 for the 2014 first quarter versus $304,202 for the 2013 first quarter.  This decrease was due to higher selling, general and administrative (SG&A) expenses, which included costs related to the roll-out of the company's dual brand product strategy.

Income before taxes was $215,527 for the 2014 first quarter versus $304,740 the prior year.

Income tax expense of approximately $81,000 for the 2014 first quarter was similar to the same quarter last year.   The company's book tax rate was 37.6% for the three months ended March 31, 2014, compared to 26.6% for the same period in 2013.

Net Income was $134,427 for the 2014 first quarter versus $233,601 for the same period last year.  Earnings per share were $0.01 for the first quarter of 2014 and 2013.

EBITDA for the first three months of 2014 was $403,761 compared to $508,805 for the same period a year ago.  Depreciation and amortization expense was $152,395 for the 2014 first quarter or $11,425 below the 2013 first quarter.  A reconciliation of EBITDA to GAAP Net Income is provided in an attachment to the summary financial statements.

Investor Conference Call

The OurPet's Company has scheduled an investor conference call for Thursday, April 24, 2014, at 4:30 pm. Eastern Time (ET).  Dr. Steve Tsengas, Chairman and CEO, and Scott Mendes, Chief Financial Officer, will discuss the company's growth strategy and financial results followed by a question and answer session.  To participate in the conference call, individuals should dial (877) 485-3107.  Phone lines will open at 4:20 p.m. ET.  A digital replay of the investor conference call will be available following the call on the company's website: www.ourpets.com/investor/investors.html.

About OurPet's Company

The OurPet's Company designs, produces and markets a broad line of innovative, trend-setting pet products and accessories in the United States and overseas. The OurPet's Company has an extensive intellectual property portfolio of with over 225 patents, which are either issued or in pending status. 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.  For further information, contact:

CONTACTS 

INVESTOR RELATIONS

OurPet's Company

InvestQuest, Inc.

Dr. Steven Tsengas, CEO

Robert Lentz

(440) 343-6500, x111

(614) 876-1900

 

OURPET'S COMPANY AND SUBSIDIARIES

 CONSOLIDATED OPERATING RESULTS




For the Three Months Ended


March 31,


2014                      2013





Net revenue

$   5,214,471


$   5,040,645

Cost of goods sold

3,660,570


3,584,274

          Gross profit on sales

1,553,901


1,456,371





Selling, general and administrative expenses

1,312,965


1,152,169





          Income from operations

240,936


304,202





Other income

(10,430)


(40,783)

Interest expense

35,839


40,245

Income before taxes

215,527


304,740





Income Tax expense

81,100


81,139

Net Income

$      134,427


$      223,601









Basic and Diluted Earnings Per Common Share




  After Dividend Requirements For Preferred




  Stock:




    Net Income  

$             0.01


$             0.01









Weighted average number of common shares




    outstanding used to calculate

16,695,076


15,883,560

    basic earnings per share








Weighted average number of common and




   equivalent shares outstanding used to

18,297,349


17,645,946

   calculate diluted earnings per share
































OURPET'S COMPANY AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS




March 31,


December 31,


2014


2013

ASSETS




  Cash and equivalents

$        91,650


$        57,975

  Receivables, net

2,650,309


2,811,139

  Inventories, net

6,922,298


5,876,724

  Prepaid expenses

534,591


397,268

          Total current assets

10,198,848


9,143,106





 LONG TERM ASSETS




  Property and equipment, net

1,990,727


1,891,209

  Amortizable intangible assets, net

362,373


370,850

  Intangible Assets

461,000


461,000

  Goodwill

67,511


67,511

  Deposits and Other assets

18,003


18,003

           Total long term assets

2,899,614


2,808,573





          Total assets

$ 13,098,462


$ 11,951,679





LIABILITIES AND STOCKHOLDERS' EQUITY




  Notes payable

$      100,000


$      100,000

  Current maturities of long-term debt

312,049


397,575

  Accounts payable 

2,097,738


1,169,925

  Accrued expenses

507,438


861,010

          Total current liabilities

3,017,225


2,528,510





LONG TERM LIABILITIES




  Long-term debt - less current portion above

670,378


721,389

  Revolving line of credit

2,415,032


1,833,032

  Deferred income taxes

232,427


245,775

          Total long term liabilities

3,317,837


2,800,196





          Total liabilities

6,335,062


5,328,706





  Stockholders' Equity

6,763,400


6,622,973





           Total liabilities and stockholders' equity

$ 13,098,462


$ 11,951,679

 


OurPet's Company
EBITDA - Q1'14 vs. Q1'13


EBITDA

Q1'14

Q1'13




Net Income

$  134,427

$  223,601

Interest expense

$    35,839

40,245

Tax Expense

$    81,100

81,139

Depreciation

$  133,685

152,189

Amortization

$    18,710

11,631

    Total EBITDA

$  403,761

$  508,805




Stock Options expense

$      3,000

$      6,000

Warrants expense

$      3,000

$      3,000

    Total Adjusted EBITDA

$  409,761

$  517,805




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

 

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SOURCE OurPet's Company



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http://www.ourpets.com

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