PetIQ, Inc. (“PetIQ” or the “Company”) (Nasdaq: PETQ), a leading
pet medication and wellness company, today reported financial
results for the three and six months ended June 30, 2020.
“We are very proud of our record quarterly sales
which are a testament to the strength of our team and the
diversification of our business model. Growth in our Products
segment fueled our quarterly results as the community clinics and
wellness centers in our Services segment were temporarily closed
during the quarter due to COVID-19,” commented Cord Christensen,
PetIQ’s Chairman and Chief Executive Officer. “All of our
manufacturing and distribution facilities remained fully
operational throughout the quarter and enabled us to deliver better
than 99% fill rates across our customer base. Our team demonstrated
incredible perseverance and agility to identify solutions in a
challenging operating environment. In the Services segment we
implemented new safety, sanitation and support protocols and are
now aggressively executing against our re-opening plan, which we
expect to position us with 95% of our community clinics and
wellness centers back in operation by the end of the third quarter
of 2020. We are pleased that in the locations we have
re-opened to-date pet counts and average ticket per pet are quickly
returning to pre-COVID levels. Looking ahead, we believe we remain
well positioned for continued growth across both of our business
segments as the humanization of pets continues to grow,
representing a strong tailwind for our business of providing
affordable and convenient access to veterinarian services,
prescriptions, and OTC medications.”
Second Quarter 2020 Highlights
Compared to Prior Year Period
- Record second quarter net sales of $267.0 million, an increase
of 21.0%, despite Services segment closures related to
COVID-19
- Product segment net sales of $264.3 million, an increase of
35.8%
- Services Segment net revenues of $2.7 million compared to $26.0
million for the same period last year
- Net loss of $2.0 million compared to net income of $5.9 million
in the prior year period, primarily due to $8.9 million of
integration expenses; $4.4 million from COVID-19 impacts related to
the temporary closure of more than 3,600 community clinics and 99
wellness centers in the Services segment, including direct labor
costs as the Company continued to pay employees and $2/hour
incentive to frontline manufacturing and distribution workforce in
the Products segment; $3.7 million of incremental interest expense;
and $2.7 million of additional net non-same store loss
contribution
- Adjusted net income of $17.1 million compared to adjusted net
income of $15.8 million
- Adjusted EBITDA of $28.3 million, an increase of 35.9%
- The Company generated $26.2 million in excess cash from
operations for the quarter
- Closed the acquisition of the
Capstar® portfolio of products on July 31, 2020
- Giving effect to the
Capstar® acquisition closing, the Company has
total liquidity of approximately $102 million, and an additional
$15 million available via an accordion feature of the credit
agreement for a total of $117 million
Provides Update on Services Segment
Reopening Plan
- As of today, the Company has re-opened 60% of its wellness
centers and has piloted and started to re-open community
clinics
- The Company expects to re-open approximately 95% of its
community clinics and wellness centers by the end of the third
quarter of 2020
- 27 new wellness centers under construction prior to the on-set
of the pandemic are all expected to have grand openings in the
fourth quarter of 2020
- Results from recent re-openings have demonstrated a quick
return in customer traffic and average ticket to pre COVID-19
rates
- The Company instituted new sanitation, safety and support
protocols since the closure of all service locations as a result of
the pandemic to ensure that all locations once re-opened are able
to remain in operation as an essential business through any future
virus outbreaks
- Launched Telehealth Platform for community clinics and wellness
centers to virtually provide pet health and wellness services to
pet parents and their pets
Second Quarter 2020 Financial Results
Net sales increased 21.0% to $267.0 million for
the second quarter of 2020, compared to $220.6 million for the same
period in the prior year. Product segment sales were $264.3 million
and Services segment revenues were $2.7 million in the second
quarter of 2020. The increase in consolidated net sales primarily
reflects growth in existing retail partners and sales contribution
from the Perrigo Animal Health acquisition, with an emphasis on the
Company’s prescription drug program at e-commerce partners due to
evolving consumer shopping habits as a result of stay-at-home
orders associated with COVID-19. Management estimates that the
Services segment would have contributed approximately a total of
$29 million in net revenues if Services locations had remained open
and performed at budget in the second quarter.
Second quarter 2020 gross profit was $42.2
million, an increase of 20.9% compared to $34.9 million in the
prior year period. Gross margin was consistent with prior year
period 15.8%. Adjusted gross profit was $47.3 million and
adjusted gross margin was 17.7% for the second quarter 2020, which
reflects the addition of costs associated with the temporary
Services segment closures and non-same store loss
contribution. Management estimates that the Services segment
would have contributed an additional 210 basis points to gross
margin if Services locations had remained open and performed at
budget in the second quarter.
Net loss was $2.0 million for the second quarter
of 2020 compared to net income of $5.9 million in the prior year
period. The second quarter of 2020 net loss was primarily due
to $8.9 million of integration expenses; $4.4 million from COVID-19
impacts related to the temporary closure of more than 3,600
community clinics and 99 wellness centers in the Services segment,
including direct labor costs as the Company continued to pay
employees and $2/hour incentive to frontline manufacturing and
distribution workforce in the Products segment; $3.7 million of
incremental interest expense; and $2.7 million of additional net
non-same store loss contribution.
Adjusted net income was $17.1 million, an increase of 8.2%
compared to $15.8 million of adjusted net income in the prior year
period.
Second quarter adjusted EBITDA increased 35.9% to $28.3 million
compared to $20.8 million in the prior year period. Adjusted
EBITDA margin increased 110 basis points to 10.6% compared to 9.5%
in the prior year period.
Adjusted gross profit, adjusted net income and
adjusted EBITDA are non-GAAP financial measures. The Company
believes these non-GAAP financial measures provide investors with
additional insight into the way management views reportable segment
operations in light of changes in the Company’s operations,
including the increase of manufacturing operations as a result of
the Perrigo Animal Health Acquisition in the Products segment and
the growth of the Company’s wellness centers, host partners, and
regions within the Services segment. See “Non-GAAP Measures”
for a definition of these measures and the financial tables that
accompany this release for a reconciliation to the most comparable
GAAP measure.
Segment Results
Products: For the second quarter of 2020,
Product segment net sales increased 35.8% to $264.3 million.
Product adjusted EBITDA increased 98% to $41.9 million. This
compares to Product segment sales and adjusted EBITDA of $194.6
million and $21.1 million, respectively, for the second quarter of
2019.
All manufacturing and distribution facilities
are fully operational and have maintained production and fill rates
in excess of 99% since the onset of COVID-19. The Company
paid an additional $2 per hour to its manufacturing and
distribution work force in the quarter and implemented safety,
sanitation and support protocols in all facilities to minimize
exposure and protect team members from COVID-19.
Services: For the second quarter of 2020,
Services segment net revenues were $2.7 million compared to $26.0
million in the same period last year. Services adjusted
EBITDA of $1.1 million compared to $6.8 million in the second
quarter of 2019. Management estimates that the Services
segment would have contributed an additional $26 million of net
revenue and $5.0 million of adjusted EBITDA if Services locations
had remained open and performed at budget in the second quarter.
Based on these management estimates, the Services segment net
revenues and adjusted EBITDA for the second quarter of 2020 would
have been approximately $29.0 million and $6.0 million,
respectively.
Cash Flow and Balance Sheet
As of June 30, 2020, the Company had cash and
cash equivalents of $117.0 million. The Company’s long-term
debt balance, which is largely comprised of its revolving credit
facility, term loan and convertible debt issued in the quarter, was
$357.8 million as of June 30, 2020. After giving effect for
the July 31, 2020 closing of the Company’s $95 million acquisition
of Capstar®, the Company had total liquidity of
approximately $102 million, and an additional $15 million available
via an accordion feature of the credit agreement for a total of
$117 million.
Working capital increased $145.5 million for the
year-to-date period ended June 30, 2020 versus year end, primarily
due $123 million in net proceeds from the convertible note
offering, as well as positive operating cash flows, offset by
growth in working capital assets and pay downs on the Company’s
ABL.
Third Quarter Guidance
As previously announced, the Company’s annual
guidance provided on March 10, 2020 remains suspended due to the
uncertainty surrounding the impact and duration from the COVID-19
pandemic on its Services segment.
Based on these factors, the Company is providing
third quarter 2020 guidance of:
- Consolidated net sales in the range of $160 million to $170
million, including minimal contribution from the Services segment
as it executes on its aforementioned re-opening plan during the
quarter.
- Adjusted EBITDA* in the range of $15 million to $18 million.
This third quarter guidance assumes very minimal contribution from
the Services segment and the Capstar® acquisition
that closed on July 31, 2020, due to seasonality that is consistent
with PetIQ’s existing flea and tick business and on-hand inventory
that the Company is carrying at its historical distributed product
margin profile until the middle of September when the Company will
first realize its advantageous manufactured margin profile for the
Capstar® portfolio of products that are now under the Company’s
ownership. The Company expects normal margin and contribution
for the fourth quarter and beyond from
Capstar®.
The Company continues to expect full year 2021
incremental EBITDA contribution from Capstar® of
greater than $20 million. Long-term, the Company remains confident
in achieving its strategic and financial objectives.
*The Company does not provide guidance for the
most directly comparable GAAP measure, net income, and similarly
cannot provide a reconciliation between its forecasted adjusted
EBITDA and net income metrics without unreasonable effort due to
the unavailability of reliable estimates for certain items. These
items are not within the Company’s control and may vary greatly
between periods and could significantly impact future financial
results.
Conference Call and Webcast
The Company will host a conference call with members of the
executive management team to discuss these results with additional
comments and details. The conference call is scheduled to begin at
4:30 p.m. ET on Thursday, August 6, 2020. To participate on the
live call listeners in North America may dial 855-327-6837 and
international listeners may dial 631-891-4304.
In addition, the call will be broadcast live over the Internet
hosted at the “Investors” section of the Company's website
at www.PetIQ.com. A telephonic playback will be available
through August 27, 2020. North American listeners may dial
844-512-2921 and international listeners may dial 412-317-6671 the
passcode is 10010263.
About PetIQ
PetIQ 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. The company engages with
customers through more than 60,000 points of distribution across
retail and e-commerce channels with its branded distributed
medications, which is further supported by its own world-class
medications manufacturing facility in Omaha, Nebraska. The
company’s national service platform, VIP Petcare, operates in over
3,400 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 we can give them.
Forward Looking Statements
This press release contains forward-looking
statements that involve risks and uncertainties, such as statements
about our plans, objectives, expectations, assumptions or future
events. In some cases, you can identify forward-looking statements
by terminology such as "anticipate," "estimate," "plan," "project,"
"continuing," "ongoing," "expect," "believe," "intend," "may,"
"will," "should," "could" and similar expressions.
Forward-looking statements involve estimates, assumptions, known
and unknown risks, uncertainties and other factors that could cause
actual results to differ materially from any future results,
performances, or achievements expressed or implied by the
forward-looking statements. Forward-looking statements should not
be read as a guarantee of future performance or results, and will
not necessarily be accurate indications of the times at, or by,
which such performance or results will be achieved. Forward-looking
statements are based on information available at the time those
statements are made or management's good faith belief as of that
time with respect to future events, and are subject to risks and
uncertainties that could cause actual performance or results to
differ materially from those expressed in or suggested by the
forward-looking statements. Important factors that could cause such
differences include, but are not limited to, the impact of COVID-19
on our business and the global economy; our ability to successfully
grow our business through acquisitions; our dependency on a limited
number of customers; our ability to implement our growth strategy
effectively; disruptions in our manufacturing and distribution
chains; competition from veterinarians and others in our industry;
reputational damage to our brands; economic trends and spending on
pets; the effectiveness of our marketing and trade promotion
programs; recalls or withdrawals of our products or product
liability claims; our ability to manage our manufacturing and
supply chain effectively; disruptions in our manufacturing and
distribution chains; our ability to introduce new products and
improve existing products; our failure to protect our intellectual
property; costs associated with governmental regulation; our
ability to keep and retain key employees; our ability to sustain
profitability; and the risks set forth under the “Risk Factors” of
our Annual Report on Form 10-K for the year ended December 31,
2019, our Form 10-Q for the quarter ended March 31, 2020 and other
reports filed time to time with the Securities and Exchange
Commission.
Additional risks and uncertainties not currently known to us or
that we currently deem to be immaterial also may materially
adversely affect our business, financial condition or operating
results. The forward-looking statements speak only as of the
date on which they are made, and, except as required by law, we
undertake no obligation to update any forward-looking statement to
reflect events or circumstances after the date on which the
statement is made or to reflect the occurrence of unanticipated
events. In addition, we cannot assess the impact of each factor on
our business or the extent to which any factor, or combination of
factors, may cause actual results to differ materially from those
contained in any forward-looking statements. Consequently, you
should not place undue reliance on forward-looking statements.
Non-GAAP Financial Measures
In addition to financial results reported in
accordance with U.S. GAAP, PetIQ uses the following non-GAAP
financial measures: Adjusted net income, Adjusted gross profit,
Adjusted EBITDA, and Adjusted EBITDA Margin.
Adjusted net income consists of net income
adjusted for tax expense, acquisition expenses, COVID-19 related
costs, integration costs and costs of discontinued clinics, new
clinic launch expense, and stock based compensation expense.
Adjusted net Income is utilized by management: to evaluate the
effectiveness of our business strategies.
Adjusted gross profit consists of gross profit
adjusted for COVID-19 related costs, gross profit (loss) on
veterinarian clinics and wellness centers that are not part of same
store sales, and new clinic launch expense. Adjusted gross
profit is utilized by management to evaluate the effectiveness of
our business strategies.
EBITDA and Adjusted EBITDA are non-GAAP
financial measures. EBITDA represents net income before interest,
income taxes and depreciation and amortization. Adjusted EBITDA
represents EBITDA plus adjustments for transactions that management
does not believe are representative of our core ongoing business.
Adjusted EBITDA margin is adjusted EBITDA stated as a percentage of
net sales. Adjusted EBITDA is utilized by management: (i) as
a factor in evaluating management's performance when determining
incentive compensation, (ii) to evaluate the effectiveness of our
business strategies and (iii) allow for improved comparability over
prior periods due to significant growth in the Company’s new
wellness centers. The Company presents EBITDA because it is a
necessary component for computing adjusted EBITDA.
We believe that the use of adjusted net income,
adjusted gross profit, adjusted EBITDA, and adjusted EBITDA margin
provide additional tools for investors to use in evaluating ongoing
operating results and trends. In addition, you should be aware when
evaluating adjusted net income, adjusted gross profit, adjusted
EBITDA and adjusted EBITDA margin, that in the future we may incur
expenses similar to those excluded when calculating these measures.
Our presentation of these measures should not be construed as an
inference that our future results will be unaffected by these or
other unusual or non-recurring items. Our computation of adjusted
net income, adjusted gross profit, adjusted EBITDA and adjusted
EBITDA margin may not be comparable to other similarly titled
measures computed by other companies, because all companies do not
calculate adjusted net income, adjusted gross profit, adjusted
EBITDA and adjusted EBITDA margin in the same manner. Our
management does not, and you should not, consider adjusted net
income, adjusted gross profit, adjusted EBITDA margin, or adjusted
EBITDA in isolation or as an alternative to financial measures
determined in accordance with GAAP. The principal limitation of
adjusted net income, adjusted gross profit, adjusted EBITDA margin,
and adjusted EBITDA is that they exclude significant expenses and
income that are required by GAAP to be recorded in our financial
statements. See a reconciliation of Non-GAAP measures to the
most comparable GAAP measure, in the financial tables that
accompany this release.
Definitions
- Community clinic – A community clinic is defined as an event,
or a visit to a retail host partner location, by the Company’s
veterinary staff utilizing the Company’s mobile service
vehicles. Clinic locations and schedules vary by location and
seasonally. Due to the non-standardization of the Company’s
community clinics, these clinics are grouped as part of geographic
regions. New regions and host partners are excluded from the
same store sale calculation until they have six full consecutive
quarters of operations.
- Wellness center – A wellness center is a physical fixed service
location within the existing footprint of one of our retail
partners. These wellness centers operate under a variety of
brands based on the needs of our partner locations.
- Regional offices – Regional offices support the operations of
the Company’s services segment which include its veterinarian
community clinics and wellness centers. These offices are
staffed with field management and other operational staff.
CONTACT:
|
|
Investor Relations Contact: |
Media Relations Contact: |
ICRJeff Sonnek646-277-1263
jeff.sonnek@icrinc.com |
ICRCory
Ziskind646-277-1232cory.ziskind@icrinc.com |
|
|
PetIQ, Inc.Condensed
Consolidated Balance Sheets(Unaudited, in 000’s
except for per share amounts)
|
|
|
|
|
June 30, 2020 |
|
December 31, 2019 |
Current assets |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
117,023 |
|
|
$ |
27,272 |
|
Accounts receivable, net |
|
|
145,323 |
|
|
|
71,377 |
|
Inventories |
|
|
111,300 |
|
|
|
79,703 |
|
Other current assets |
|
|
9,510 |
|
|
|
7,071 |
|
Total current assets |
|
|
383,156 |
|
|
|
185,423 |
|
Property, plant and equipment, net |
|
|
57,471 |
|
|
|
52,525 |
|
Operating lease right of use assets |
|
|
19,768 |
|
|
|
20,785 |
|
Deferred tax assets |
|
|
58,660 |
|
|
|
59,780 |
|
Other non-current assets |
|
|
1,955 |
|
|
|
3,214 |
|
Intangible assets, net |
|
|
115,362 |
|
|
|
119,956 |
|
Goodwill |
|
|
230,658 |
|
|
|
231,045 |
|
Total assets |
|
$ |
867,030 |
|
|
$ |
672,728 |
|
Liabilities and equity |
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
Accounts payable |
|
$ |
91,492 |
|
|
$ |
51,538 |
|
Accrued wages payable |
|
|
10,950 |
|
|
|
9,082 |
|
Accrued interest payable |
|
|
1,198 |
|
|
|
83 |
|
Other accrued expenses |
|
|
13,017 |
|
|
|
3,871 |
|
Current portion of operating leases |
|
|
4,717 |
|
|
|
4,619 |
|
Current portion of long-term debt and finance leases |
|
|
3,855 |
|
|
|
3,821 |
|
Total current liabilities |
|
|
125,229 |
|
|
|
73,014 |
|
Operating leases, less current installments |
|
|
15,552 |
|
|
|
16,580 |
|
Long-term debt, less current installments |
|
|
357,795 |
|
|
|
251,376 |
|
Finance leases, less current installments |
|
|
2,840 |
|
|
|
3,331 |
|
Other non-current liabilities |
|
|
2,523 |
|
|
|
117 |
|
Total non-current liabilities |
|
|
378,710 |
|
|
|
271,404 |
|
Commitments and contingencies (Note 13) |
|
|
|
|
|
|
Equity |
|
|
|
|
|
|
Additional paid-in capital |
|
|
344,568 |
|
|
|
300,120 |
|
Class A common stock, par value $0.001 per share, 125,000 shares
authorized; 24,658 and 23,554 shares issued and outstanding,
respectively |
|
|
24 |
|
|
|
23 |
|
Class B common stock, par value $0.001 per share, 100,000 shares
authorized; 3,770 and 4,752 shares issued and outstanding,
respectively |
|
|
4 |
|
|
|
5 |
|
Accumulated deficit |
|
|
(19,897 |
) |
|
|
(15,903 |
) |
Accumulated other comprehensive loss |
|
|
(1,774 |
) |
|
|
(1,131 |
) |
Total stockholders' equity |
|
|
322,925 |
|
|
|
283,114 |
|
Non-controlling interest |
|
|
40,166 |
|
|
|
45,196 |
|
Total equity |
|
|
363,091 |
|
|
|
328,310 |
|
Total liabilities and equity |
|
$ |
867,030 |
|
|
$ |
672,728 |
|
|
|
|
|
|
|
|
|
|
PetIQ, Inc.Condensed
Consolidated Statements of (Loss)
Income(Unaudited, in 000’s, except for per share
amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended |
|
For the Six Months Ended |
|
|
June 30, 2020 |
|
June 30, 2019 |
|
June 30, 2020 |
|
June 30, 2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Product sales |
|
$ |
264,307 |
|
|
$ |
194,606 |
|
|
$ |
430,587 |
|
|
$ |
320,690 |
|
Services revenue |
|
|
2,675 |
|
|
|
26,028 |
|
|
|
23,173 |
|
|
|
48,380 |
|
Total net sales |
|
|
266,982 |
|
|
|
220,634 |
|
|
|
453,760 |
|
|
|
369,070 |
|
Cost of products sold |
|
|
217,469 |
|
|
|
167,845 |
|
|
|
352,248 |
|
|
|
275,909 |
|
Cost of services |
|
|
7,329 |
|
|
|
17,889 |
|
|
|
27,174 |
|
|
|
33,531 |
|
Total cost of
sales |
|
|
224,798 |
|
|
|
185,734 |
|
|
|
379,422 |
|
|
|
309,440 |
|
Gross profit |
|
|
42,184 |
|
|
|
34,900 |
|
|
|
74,338 |
|
|
|
59,630 |
|
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative expenses |
|
|
38,492 |
|
|
|
24,450 |
|
|
|
70,182 |
|
|
|
44,988 |
|
Contingent note revaluations gain |
|
|
— |
|
|
|
1,460 |
|
|
|
— |
|
|
|
780 |
|
Operating income |
|
|
3,692 |
|
|
|
8,990 |
|
|
|
4,156 |
|
|
|
13,862 |
|
Interest expense, net |
|
|
(5,967 |
) |
|
|
(2,242 |
) |
|
|
(10,671 |
) |
|
|
(4,179 |
) |
Foreign currency gain (loss), net |
|
|
52 |
|
|
|
49 |
|
|
|
125 |
|
|
|
(73 |
) |
Other income, net |
|
|
324 |
|
|
|
2 |
|
|
|
689 |
|
|
|
15 |
|
Total other expense, net |
|
|
(5,591 |
) |
|
|
(2,191 |
) |
|
|
(9,857 |
) |
|
|
(4,237 |
) |
Pretax
net (loss) income |
|
|
(1,899 |
) |
|
|
6,799 |
|
|
|
(5,701 |
) |
|
|
9,625 |
|
Income
tax (expense) benefit |
|
|
(61 |
) |
|
|
(881 |
) |
|
|
1,108 |
|
|
|
(1,381 |
) |
Net (loss) income |
|
|
(1,960 |
) |
|
|
5,918 |
|
|
|
(4,593 |
) |
|
|
8,244 |
|
Net
(loss) income attributable to non-controlling interest |
|
|
(69 |
) |
|
|
2,103 |
|
|
|
(599 |
) |
|
|
2,818 |
|
Net
(loss) income attributable to PetIQ, Inc. |
|
$ |
(1,891 |
) |
|
$ |
3,815 |
|
|
$ |
(3,994 |
) |
|
$ |
5,426 |
|
Net (loss) income per
share attributable to PetIQ, Inc. Class A common
stock |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.08 |
) |
|
$ |
0.17 |
|
|
$ |
(0.17 |
) |
|
$ |
0.25 |
|
Diluted |
|
$ |
(0.08 |
) |
|
$ |
0.17 |
|
|
$ |
(0.17 |
) |
|
$ |
0.24 |
|
Weighted Average
shares of Class A common stock outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
24,425 |
|
|
|
22,365 |
|
|
|
24,077 |
|
|
|
22,087 |
|
Diluted |
|
|
24,425 |
|
|
|
22,597 |
|
|
|
24,077 |
|
|
|
22,284 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PetIQ, Inc.Condensed
Consolidated Statements of Cash Flows(Unaudited,
in 000’s)
|
|
|
|
|
|
|
|
|
For the Six Months Ended June 30, |
|
|
2020 |
|
|
2019 |
|
Cash flows from operating
activities |
|
|
|
|
|
|
Net (loss) income |
|
$ |
(4,593 |
) |
|
$ |
8,244 |
|
Adjustments to reconcile net (loss) income to net cash used in
operating activities |
|
|
|
|
|
|
Depreciation and amortization of intangible assets and loan
fees |
|
|
11,797 |
|
|
|
6,056 |
|
Gain on disposition of property, plant, and equipment |
|
|
(369 |
) |
|
|
(62 |
) |
Stock based compensation expense |
|
|
4,402 |
|
|
|
3,146 |
|
Deferred tax adjustment |
|
|
(1,109 |
) |
|
|
1,638 |
|
Contingent note revaluation |
|
|
— |
|
|
|
780 |
|
Other non-cash activity |
|
|
65 |
|
|
|
56 |
|
Changes in assets and liabilities |
|
|
|
|
|
|
Accounts receivable |
|
|
(74,138 |
) |
|
|
(40,218 |
) |
Inventories |
|
|
(31,627 |
) |
|
|
(6,294 |
) |
Other assets |
|
|
(1,073 |
) |
|
|
1,250 |
|
Accounts payable |
|
|
39,528 |
|
|
|
6,656 |
|
Accrued wages payable |
|
|
1,847 |
|
|
|
1,407 |
|
Other accrued expenses |
|
|
12,766 |
|
|
|
(717 |
) |
Net
cash used in operating activities |
|
|
(42,504 |
) |
|
|
(18,058 |
) |
Cash flows from investing
activities |
|
|
|
|
|
|
Proceeds from disposition of property, plant, and equipment |
|
|
429 |
|
|
|
69 |
|
Purchase of property, plant, and equipment |
|
|
(10,425 |
) |
|
|
(1,730 |
) |
Net
cash used in investing activities |
|
|
(9,996 |
) |
|
|
(1,661 |
) |
Cash flows from financing
activities |
|
|
|
|
|
|
Proceeds from issuance of convertible notes - liability
component |
|
|
90,465 |
|
|
|
— |
|
Proceeds from issuance of convertible notes - equity component |
|
|
53,285 |
|
|
|
— |
|
Payment for Capped Call options |
|
|
(14,821 |
) |
|
|
— |
|
Proceeds from issuance of long-term debt |
|
|
457,200 |
|
|
|
323,144 |
|
Principal payments on long-term debt |
|
|
(438,874 |
) |
|
|
(331,856 |
) |
Payment of financing fees on Convertible Notes |
|
|
(5,819 |
) |
|
|
— |
|
Tax distributions to LLC Owners |
|
|
(46 |
) |
|
|
(1,378 |
) |
Principal payments on finance lease obligations |
|
|
(761 |
) |
|
|
(737 |
) |
Payment of deferred financing fees and debt discount |
|
|
(275 |
) |
|
|
(50 |
) |
Tax withholding payments on Restricted Stock Units |
|
|
(186 |
) |
|
|
— |
|
Exercise of options to purchase class A common stock |
|
|
2,171 |
|
|
|
798 |
|
Net
cash provided by (used in) financing activities |
|
|
142,339 |
|
|
|
(10,079 |
) |
Net change in cash and cash equivalents |
|
|
89,839 |
|
|
|
(29,798 |
) |
Effect of exchange rate
changes on cash and cash equivalents |
|
|
(88 |
) |
|
|
2 |
|
Cash
and cash equivalents, beginning of period |
|
|
27,272 |
|
|
|
66,360 |
|
Cash
and cash equivalents, end of period |
|
$ |
117,023 |
|
|
$ |
36,564 |
|
|
|
|
|
|
|
|
|
|
PetIQ, Inc.Summary
Segment Results(Unaudited, in 000’s)
|
For the three months ended |
|
For the six months ended |
$'s in 000's |
June 30, 2020 |
|
June 30, 2019 |
|
June 30, 2020 |
|
June 30, 2019 |
Services segment sales: |
|
|
|
|
|
|
|
|
|
|
|
Same-store sales |
$ |
1,722 |
|
|
$ |
23,873 |
|
|
$ |
19,938 |
|
|
$ |
44,709 |
|
Non same-store sales |
|
953 |
|
|
|
2,155 |
|
|
|
3,235 |
|
|
|
3,671 |
|
Net services segment sales |
|
2,675 |
|
|
|
26,028 |
|
|
|
23,173 |
|
|
|
48,380 |
|
Products segment sales |
|
264,307 |
|
|
|
194,606 |
|
|
|
430,587 |
|
|
|
320,690 |
|
Total net sales |
|
266,982 |
|
|
|
220,634 |
|
|
|
453,760 |
|
|
|
369,070 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
|
|
|
|
|
|
|
|
|
|
|
Products |
|
41,851 |
|
|
|
21,156 |
|
|
|
66,130 |
|
|
|
34,712 |
|
Services |
|
1,112 |
|
|
|
6,804 |
|
|
|
3,101 |
|
|
|
12,081 |
|
Unallocated Corporate |
|
(14,657 |
) |
|
|
(7,130 |
) |
|
|
(26,467 |
) |
|
|
(15,091 |
) |
Total Adjusted EBITDA |
$ |
28,306 |
|
|
$ |
20,831 |
|
|
$ |
42,764 |
|
|
$ |
31,703 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PetIQ,
Inc.Reconciliation between gross profit and
adjusted gross profit(Unaudited, in
000’s)
|
For the three months ended |
|
For the six months ended |
|
June 30, 2020 |
|
June 30, 2019 |
|
June 30, 2020 |
|
June 30, 2019 |
Gross profit |
$ |
42,184 |
|
$ |
34,900 |
|
$ |
74,338 |
|
$ |
59,630 |
Plus: |
|
|
|
|
|
|
|
|
|
|
|
Non same-store gross loss(5) |
|
2,082 |
|
|
1,256 |
|
|
5,523 |
|
|
2,690 |
COVID-19 related costs |
|
2,996 |
|
|
— |
|
|
2,996 |
|
|
— |
Adjusted gross profit |
$ |
47,262 |
|
$ |
36,156 |
|
$ |
82,857 |
|
$ |
62,320 |
|
|
|
|
|
|
|
|
|
|
|
|
PetIQ,
Inc.Reconciliation between Net (Loss) Income and
Adjusted EBITDA(Unaudited, in 000’s)
|
|
For the three months ended |
|
For the six months ended |
|
|
June 30, 2020 |
|
June 30, 2019 |
|
June 30, 2020 |
|
June 30, 2019 |
Net income |
|
$ |
(1,960 |
) |
|
$ |
5,918 |
|
|
$ |
(4,593 |
) |
|
$ |
8,244 |
|
Plus: |
|
|
|
|
|
|
|
|
|
|
|
|
Tax expense (benefit) |
|
|
61 |
|
|
|
881 |
|
|
|
(1,108 |
) |
|
|
1,381 |
|
Depreciation |
|
|
2,983 |
|
|
|
1,529 |
|
|
|
5,856 |
|
|
|
3,183 |
|
Amortization |
|
|
2,250 |
|
|
|
1,278 |
|
|
|
4,492 |
|
|
|
2,557 |
|
Interest |
|
|
5,967 |
|
|
|
2,242 |
|
|
|
10,671 |
|
|
|
4,179 |
|
EBITDA |
|
$ |
9,301 |
|
|
$ |
11,848 |
|
|
$ |
15,318 |
|
|
$ |
19,544 |
|
Acquisition costs(1) |
|
|
146 |
|
|
|
2,889 |
|
|
|
732 |
|
|
|
3,465 |
|
Stock based compensation expense |
|
|
1,844 |
|
|
|
1,602 |
|
|
|
4,402 |
|
|
|
3,146 |
|
Non same-store revenue(2) |
|
|
(953 |
) |
|
|
(2,155 |
) |
|
|
(3,235 |
) |
|
|
(3,671 |
) |
Non same-store costs(2) |
|
|
3,698 |
|
|
|
4,045 |
|
|
|
10,098 |
|
|
|
7,296 |
|
Fair value adjustment of contingent note(3) |
|
|
— |
|
|
|
1,460 |
|
|
|
— |
|
|
|
780 |
|
Integration costs and costs of discontinued clinics(4) |
|
|
8,850 |
|
|
|
1,142 |
|
|
|
9,304 |
|
|
|
1,142 |
|
Clinic launch expenses(5) |
|
|
603 |
|
|
|
— |
|
|
|
1,279 |
|
|
|
— |
|
Litigation expenses |
|
|
384 |
|
|
|
— |
|
|
|
433 |
|
|
|
— |
|
COVID-19 related costs(6) |
|
|
4,433 |
|
|
|
— |
|
|
|
4,433 |
|
|
|
— |
|
Adjusted EBITDA |
|
$ |
28,306 |
|
|
$ |
20,831 |
|
|
$ |
42,764 |
|
|
$ |
31,703 |
|
Adjusted EBITDA Margin |
|
|
10.6 |
% |
|
|
9.5 |
% |
|
|
9.5 |
% |
|
|
8.7 |
% |
(1) |
Acquisition costs include legal, accounting, banking, consulting,
diligence, and other out-of-pocket costs related to completed and
contemplated acquisitions. |
(2) |
Non same-store revenue and costs
relate to our Services segment and are from wellness centers, host
partners, and regions with less than six full trailing quarters of
operating results. |
(3) |
Fair value adjustment on the
contingent note represents the non-cash adjustment to mark the 2019
Contingent Note to fair value. |
(4) |
Integration costs and costs of
discontinued clinics represent costs related to integrating the
acquired businesses, such as personnel costs like severance and
signing bonuses, consulting work, contract termination, and IT
conversion costs. These costs are primarily in the Products segment
and the corporate segment for personnel costs, legal and consulting
expenses, and IT costs. |
(5) |
Clinic launch expenses relate to
our Services segment and represent the nonrecurring costs to open
new veterinary wellness centers, primarily employee costs,
training, marketing, and rent prior to opening for business. |
(6) |
Costs related to maintaining
service segment infrastructure, staffing, and overhead related
clinics and wellness centers closed due to COVID-19 related health
and safety initiatives. Product segment and unallocated
corporate costs related to incremental wages paid to essential
workers and sanitation costs due to COVID. |
|
|
PetIQ,
Inc.Reconciliation between net (loss) income and
adjusted net income(Unaudited, in
000’s)
|
|
Three Months Ended |
|
Six Months Ended |
|
|
June 30, 2020 |
|
June 30, 2019 |
|
June 30, 2020 |
|
June 30, 2019 |
Net (loss) income |
|
$ |
(1,960 |
) |
|
$ |
5,918 |
|
|
$ |
(4,593 |
) |
|
$ |
8,244 |
|
Plus: |
|
|
|
|
|
|
|
|
|
|
|
|
Tax expense (benefit) |
|
|
61 |
|
|
|
881 |
|
|
|
(1,108 |
) |
|
|
1,381 |
|
Acquisition costs(1) |
|
|
146 |
|
|
|
2,889 |
|
|
|
732 |
|
|
|
3,465 |
|
Integration costs and costs of discontinued clinics(2) |
|
|
8,850 |
|
|
|
1,142 |
|
|
|
9,304 |
|
|
|
1,142 |
|
Stock based compensation expense |
|
|
1,844 |
|
|
|
1,602 |
|
|
|
4,402 |
|
|
|
3,146 |
|
Fair value adjustment of contingent note(3) |
|
|
— |
|
|
|
1,460 |
|
|
|
— |
|
|
|
780 |
|
Non same-store revenue(4) |
|
|
(953 |
) |
|
|
(2,155 |
) |
|
|
(3,235 |
) |
|
|
(3,671 |
) |
Non same-store costs(4) |
|
|
3,698 |
|
|
|
4,045 |
|
|
|
10,098 |
|
|
|
7,296 |
|
Clinic launch expenses(5) |
|
|
603 |
|
|
|
— |
|
|
|
1,279 |
|
|
|
— |
|
Litigation expenses |
|
|
384 |
|
|
|
— |
|
|
|
433 |
|
|
|
— |
|
COVID-19 related costs(6) |
|
|
4,433 |
|
|
|
— |
|
|
|
4,433 |
|
|
|
— |
|
Adjusted Net income |
|
$ |
17,106 |
|
|
$ |
15,782 |
|
|
$ |
21,745 |
|
|
$ |
21,783 |
|
(1) |
Acquisition costs include legal, accounting, banking, consulting,
diligence, and other out-of-pocket costs related to completed and
contemplated acquisitions. |
(2) |
Non same-store revenue and costs
relate to our Services segment and are from wellness centers, host
partners, and regions with less than six full trailing quarters of
operating results. |
(3) |
Fair value adjustment on the
contingent note represents the non-cash adjustment to mark the 2019
Contingent Note to fair value. |
(4) |
Integration costs and costs of
discontinued clinics represent costs related to integrating the
acquired businesses, such as personnel costs like severance and
signing bonuses, consulting work, contract termination, and IT
conversion costs. These costs are primarily in the Products segment
and the corporate segment for personnel costs, legal and consulting
expenses, and IT costs. |
(5) |
Clinic launch expenses relate to
our Services segment and represent the nonrecurring costs to open
new veterinary wellness centers, primarily employee costs,
training, marketing, and rent prior to opening for business. |
(6) |
Costs related to maintaining
service segment infrastructure, staffing, and overhead related
clinics and wellness centers closed due to COVID-19 related health
and safety initiatives. Product segment and unallocated
corporate costs related to incremental wages paid to essential
workers and sanitation costs due to COVID. |
|
|
PetIQ (NASDAQ:PETQ)
Historical Stock Chart
From Apr 2024 to May 2024
PetIQ (NASDAQ:PETQ)
Historical Stock Chart
From May 2023 to May 2024