PetIQ, Inc. (“PetIQ” or the “Company”) (Nasdaq: PETQ), a leading
pet medication and wellness company, today reported financial
results for the second quarter and six months ended June 30, 2023.
Cord Christensen, PetIQ’s Chairman & CEO commented, “We are
pleased to continue the year with second-quarter sales and adjusted
EBITDA significantly exceeding our guidance. The strategic
investments to drive awareness and consumption across both our
Products and Services segments along with our operational
excellence enabled us to deliver better-than-projected results. We
outperformed the broader categories we compete in and gained share
across PetIQ’s strategic, manufactured brands. We had record cash
generation in the quarter and substantially improved the Company’s
net leverage year-over-year. Based on these
year-to-date results and our expectations for the second half of
2023, we are raising our annual outlook.”
Second Quarter 2023 Highlights Compared to Prior Year
Period
- Record net sales of $314.5 million, an increase of 24.8%, and
above the Company’s guidance for the quarter of $270.0 million to
$280.0 million
- Products segment net sales of $278.2 million compared to $219.0
million, an increase of 27.0%
- Services segment net revenues of $36.4 million compared to
$33.0 million, an increase of 10.2%
- Gross profit was $73.9 million, an increase of 19.2%, compared
to $62.0 million
- Net income of $9.6 million, or earnings per diluted share
("EPS") of $0.32, an increase of 104.2%, compared to net income of
$4.7 million, or EPS of $0.16
- Adjusted net income of $13.4 million, or adjusted EPS of $0.46,
an increase of 39.4% compared to adjusted net income of $9.8
million, or adjusted EPS of $0.33
- EBITDA of $29.2 million, compared to $19.6 million, an increase
of 49.2%
- Record quarterly adjusted EBITDA of $32.9 million, compared to
$24.1 million, an increase of 36.3% and above the Company's
guidance for the quarter of $24.0 million to $26.0 million
- Adjusted EBITDA margin increased 80 basis points to 10.4%
- Record second quarter cash from operations of $57.7
million
- Net leverage as measured under the Company's credit agreement
was 3.6x as of June 30, 2023, compared to 5.0x
Six Month 2023 Highlights Compared to
Prior Year Period
- Net sales of $605.0 million, an increase of 14.6%
- Products segment net sales of $537.2 million compared to $466.8
million, an increase of 15.1%
- Services segment net revenues of $67.9 million compared to
$60.9 million, an increase of 11.3%
- Gross profit was $136.1 million, an increase of 13.8%, compared
to $119.6 million
- Net income of $19.3 million, or EPS of $0.66, an increase of
147.6%, compared to net income of $7.8 million, or EPS of
$0.26
- Adjusted net income of $27.6 million, or adjusted EPS of $0.95,
an increase of 39.7% compared to adjusted net income of $19.9
million, or adjusted EPS of $0.68
- EBITDA of $56.0 million, compared to $37.2 million, an increase
of 50.5%
- Adjusted EBITDA of $63.6 million, compared to $48.5 million, an
increase of 31.0%
- Adjusted EBITDA margin increased 130 basis points to 10.5%
Second Quarter 2023 Financial Results
Net sales were $314.5 million for the second quarter of 2023, an
increase of 24.8% compared to net sales of $252.0 million in the
prior year period, driven by an increase in sales from both the
Products and Services segments. Products segment net sales of
$278.2 million increased 27.0% compared to the prior year period
reflecting broad-based growth across product categories and sales
channels as well as from the previously announced acquisition of
Rocco & Roxie LLC ("Rocco & Roxie") completed on January
13, 2023. The Company experienced continued strength across flea
and tick and health and wellness product offerings with favorable
consumption trends and a significant recovery in distributed
product offerings. PetIQ’s manufactured products net sales
increased 21.2% (including the acquisition of Rocco & Roxie)
and were 29.1% of Product segment net sales compared to 31.2% in
the prior year period. Services revenue for the second quarter of
2023 increased 10.2% to $36.4 million driven by operational
improvements that allowed for increases in average revenue per
clinic and average dollar per pet served during the second quarter
of 2023.
Second quarter 2023 gross profit was $73.9 million, an increase
of 19.2%, compared to $62.0 million in the prior year period. Gross
margin decreased 110 basis points to 23.5% from 24.6% in the prior
year period due to a shift in the mix of Product segment sales to
more health and wellness products which carry a lower margin.
Selling, general and administrative expenses (“SG&A”) was
$55.2 million for the second quarter of 2023 compared to $50.6
million in the prior year period. As a percentage of net sales,
SG&A was 17.5% for the second quarter of 2023, a decrease of
260 basis points compared to the prior year period. Adjusted
SG&A was $51.5 million for the second quarter of 2023 compared
to $46.1 million in the prior year period. As a percentage of net
sales adjusted SG&A was 16.4%, a decrease of 190 basis points
compared to the prior year period. The leverage in SG&A and
adjusted SG&A was primarily due to continued leverage of costs
and increased business expense efficiencies relative to the growth
in sales, partially offset by increased advertising and promotional
expense as compared to the second quarter of 2022.
Second quarter 2023 net income increased 104.2% to $9.6 million
and EPS was $0.32, compared to net income of $4.7 million and EPS
of $0.16 in the prior year period. Adjusted net income for the
second quarter of 2023 increased 36.4% to $13.4 million and
adjusted EPS was $0.46, compared to adjusted net income of $9.8
million, and adjusted EPS of $0.33 in the prior year period.
EBITDA was $29.2 million for the second quarter of 2023 compared
to $19.6 million in the prior year period, an increase of 49.2%.
Second quarter Adjusted EBITDA was $32.9 million, an increase of
36.3%, compared to $24.1 million in the prior year period and above
the Company's guidance of $24.0 million to $26.0 million. Adjusted
EBITDA margin increased 80 basis points to 10.4% compared to 9.6%
in the prior year period.
Adjusted SG&A, adjusted net income, adjusted EPS, adjusted
EBITDA, and adjusted EBITDA margin 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. See “Non-GAAP Financial Measures”
for a definition of these measures and the financial tables that
accompany this release for a reconciliation to the most comparable
GAAP measure.
Cash Flow and Balance Sheet
The Company ended the second quarter of 2023 with total cash and
cash equivalents of $78.4 million. For the second quarter ended
June 30, 2023, the Company generated a record $57.7 million of cash
from operations which was driven by increased earnings as well as
$34.2 million from working capital benefits. The Company’s total
debt, which is comprised of its term loan, ABL, convertible notes
and capital leases, was $449.6 million as of June 30, 2023. The
Company had total liquidity, which it defines as cash on hand plus
debt availability, of $203.4 million as of June 30, 2023. The
Company's net leverage as measured under the Company's credit
agreement was 3.6x as of June 30, 2023, down from 5.0x in the prior
year period, driven by higher earnings and improved working
capital. Please refer to the financial table within this press
release for a calculation of the Company’s net leverage under the
credit agreement.
Outlook
For the full year 2023 the Company is raising its outlook
previously provided, and now expects:
- Net sales of $1,010 million to $1,050 million, an increase of
approximately 12.0% compared to 2022 based on the mid-point of the
guidance
- Adjusted EBITDA of $93 million to $97 million, an increase of
approximately 22.0% compared to 2022 based on the mid-point of the
guidance
For the third quarter of 2023 the Company expects:
- Net sales of $220 million to $240 million, an increase of
approximately 10.0% compared to the prior year period based on the
mid-point of the guidance
- Adjusted EBITDA of $18 million to $20 million, an increase of
approximately 17.0% compared to the prior year period based on the
mid-point of the guidance
The Company does not provide guidance for net income, the most
directly comparable GAAP measure to Adjusted EBITDA, and similarly
cannot provide a reconciliation between its forecasted adjusted
EBITDA and net income without unreasonable effort due to the
unavailability of reliable estimates for certain components of net
income and the respective reconciliations. These forecasted items
are not within the Company’s control, may vary greatly between
periods and could significantly impact future financial results for
the third quarter ending September 30, 2023, and full year ending
December 31, 2023.
Conference Call and Webcast
The Company will host a conference call with members of the
executive management team to discuss these results. The conference
call is scheduled to begin today at 4:30 p.m. ET. To participate on
the live call listeners in North America may dial 833-816-1410 and
international listeners may dial 412-317-0503.
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 29, 2023. North American listeners may dial 844-512-2921 and
international listeners may dial 412-317-6671; the passcode is
10180442.
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 and distributed medications as
well as health and wellness items, which are further supported by
its world-class medications manufacturing facility in Omaha,
Nebraska and health and wellness manufacturing facility in
Springville, Utah. The Company’s national service platform operates
in over 2,600 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.
Investors: katie.turner@petiq.com or
208.513.1513
Media: kara.schafer@petiq.com or
407.929.6727
Forward Looking Statements
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995
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, general economic or market conditions, global
economic slowdown, increased inflation, rising interest rates,
recent and potential future bank failures and the impacts of
COVID-19; our ability to successfully grow our business through
acquisitions and our ability to integrate acquisitions, including
Rocco & Roxie; our dependency on a limited number of customers;
our ability to implement our growth strategy effectively; our
ability to manage our manufacturing and supply chain 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 introduce new products and improve
existing products; our ability 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”
section of our Annual Report on Form 10-K for the year ended
December 31, 2022 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 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 earnings per share, adjusted
SG&A, adjusted EBITDA, and adjusted EBITDA margin.
Adjusted net income consists of net income adjusted for tax
expense, acquisition expenses, integration costs, litigation costs,
and stock-based compensation expense. Adjusted net income is
utilized by management to evaluate the effectiveness of our
business strategies. Non-GAAP adjusted earnings per share is
defined as non-GAAP adjusted net income divided by the weighted
average number of shares of common stock outstanding during the
period.
Adjusted SG&A consists of SG&A adjusted for acquisition
expenses, stock-based compensation expense, integration costs, and
litigation expense.
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 including
acquisition costs, stock-based compensation expense, and
integration costs. Adjusted EBITDA margin is adjusted EBITDA stated
as a percentage of net sales.
Adjusted EBITDA is utilized by management as a factor in
evaluating the Company's performance and the effectiveness of our
business strategies. The Company presents EBITDA because it is a
necessary component for computing adjusted EBITDA.
We believe that the use of these non-GAAP measures provides
additional tools for investors to use in evaluating ongoing
operating results and trends. In addition, you should be aware when
evaluating these non-GAAP measures 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 non-GAAP
measures may not be comparable to other similarly titled measures
computed by other companies, because all companies do not calculate
these non-GAAP measures in the same manner. Our management does
not, and you should not, consider the non-GAAP financial measures
in isolation or as an alternative to financial measures determined
in accordance with GAAP. The principal limitation of non-GAAP
financial measures is that they exclude significant expenses and
income that are required by GAAP to be recorded in our financial
statements. See a reconciliation of each non-GAAP measure to the
most comparable GAAP measure, in the financial tables that
accompany this release.
PetIQ, Inc.Condensed
Consolidated Balance Sheets(Unaudited, in 000’s
except for per share amounts)
|
|
June 30, 2023 |
|
December 31, 2022 |
Current assets |
|
|
|
|
Cash and cash equivalents |
|
$ |
78,437 |
|
|
$ |
101,265 |
|
Accounts receivable, net |
|
|
193,570 |
|
|
|
118,004 |
|
Inventories |
|
|
141,647 |
|
|
|
142,605 |
|
Other current assets |
|
|
8,788 |
|
|
|
8,238 |
|
Total current assets |
|
|
422,442 |
|
|
|
370,112 |
|
Property, plant and equipment, net |
|
|
69,776 |
|
|
|
73,395 |
|
Operating lease right of use assets |
|
|
15,440 |
|
|
|
18,231 |
|
Other non-current assets |
|
|
2,426 |
|
|
|
1,373 |
|
Intangible assets, net |
|
|
169,182 |
|
|
|
172,479 |
|
Goodwill |
|
|
204,204 |
|
|
|
183,306 |
|
Total assets |
|
$ |
883,470 |
|
|
$ |
818,896 |
|
Liabilities and equity |
|
|
|
|
Current liabilities |
|
|
|
|
Accounts payable |
|
$ |
154,141 |
|
|
$ |
112,995 |
|
Accrued wages payable |
|
|
11,826 |
|
|
|
11,512 |
|
Accrued interest payable |
|
|
1,465 |
|
|
|
1,912 |
|
Other accrued expenses |
|
|
9,909 |
|
|
|
7,725 |
|
Current portion of operating leases |
|
|
6,211 |
|
|
|
6,595 |
|
Current portion of long-term debt and finance leases |
|
|
8,152 |
|
|
|
8,751 |
|
Total current liabilities |
|
|
191,704 |
|
|
|
149,490 |
|
Operating leases, less current installments |
|
|
9,957 |
|
|
|
12,405 |
|
Long-term debt, less current installments |
|
|
440,582 |
|
|
|
443,276 |
|
Finance leases, less current installments |
|
|
837 |
|
|
|
907 |
|
Other non-current liabilities |
|
|
4,787 |
|
|
|
1,025 |
|
Total non-current liabilities |
|
|
456,163 |
|
|
|
457,613 |
|
Equity |
|
|
|
|
Additional paid-in capital |
|
|
383,020 |
|
|
|
378,709 |
|
Class A common stock, par value $0.001 per share, 125,000 shares
authorized; 29,551 and 29,348 shares issued, respectively |
|
|
29 |
|
|
|
29 |
|
Class B common stock, par value $0.001 per share, 8,402 shares
authorized; 244 and 252 shares issued and outstanding,
respectively |
|
|
— |
|
|
|
— |
|
Class A treasury stock, at cost, 373 shares |
|
|
(3,857 |
) |
|
|
(3,857 |
) |
Accumulated deficit |
|
|
(143,566 |
) |
|
|
(162,733 |
) |
Accumulated other comprehensive loss |
|
|
(1,990 |
) |
|
|
(2,224 |
) |
Total stockholders' equity |
|
|
233,636 |
|
|
|
209,924 |
|
Non-controlling interest |
|
|
1,967 |
|
|
|
1,869 |
|
Total equity |
|
|
235,603 |
|
|
|
211,793 |
|
Total liabilities and equity |
|
$ |
883,470 |
|
|
$ |
818,896 |
|
PetIQ, Inc. Condensed
Consolidated Statements of Operations (Unaudited,
in 000’s, except for per share amounts)
|
|
For the Three Months Ended |
|
For the Six Months Ended |
|
|
June 30, 2023 |
|
June 30, 2022 |
|
June 30, 2023 |
June 30, 2022 |
|
|
|
|
|
|
|
|
Product sales |
|
$ |
278,167 |
|
|
$ |
219,014 |
|
|
$ |
537,160 |
|
$ |
466,764 |
|
Services revenue |
|
|
36,380 |
|
|
|
33,000 |
|
|
|
67,858 |
|
|
60,945 |
|
Total net sales |
|
|
314,547 |
|
|
|
252,014 |
|
|
|
605,018 |
|
|
527,709 |
|
Cost of products sold |
|
|
210,428 |
|
|
|
163,568 |
|
|
|
411,330 |
|
|
354,419 |
|
Cost of
services |
|
|
30,240 |
|
|
|
26,472 |
|
|
|
57,549 |
|
|
53,681 |
|
Total cost of sales |
|
|
240,668 |
|
|
|
190,040 |
|
|
|
468,879 |
|
|
408,100 |
|
Gross profit |
|
|
73,879 |
|
|
|
61,974 |
|
|
|
136,139 |
|
|
119,609 |
|
Operating expenses |
|
|
|
|
|
|
|
Selling, general and administrative expenses |
|
|
55,159 |
|
|
|
50,595 |
|
|
|
98,486 |
|
|
98,831 |
|
Operating income |
|
|
18,720 |
|
|
|
11,379 |
|
|
|
37,653 |
|
|
20,778 |
|
Interest expense, net |
|
|
8,824 |
|
|
|
6,299 |
|
|
|
17,556 |
|
|
12,420 |
|
Other expense (income), net |
|
|
151 |
|
|
|
(201 |
) |
|
|
123 |
|
|
(204 |
) |
Total other expense, net |
|
|
8,975 |
|
|
|
6,098 |
|
|
|
17,679 |
|
|
12,216 |
|
Pretax net income |
|
|
9,745 |
|
|
|
5,281 |
|
|
|
19,974 |
|
|
8,562 |
|
Income tax expense |
|
|
(192 |
) |
|
|
(603 |
) |
|
|
(640 |
) |
|
(724 |
) |
Net income |
|
|
9,553 |
|
|
|
4,678 |
|
|
|
19,334 |
|
|
7,838 |
|
Net income attributable to non-controlling interest |
|
|
85 |
|
|
|
46 |
|
|
|
167 |
|
|
75 |
|
Net income attributable to PetIQ, Inc. |
|
$ |
9,468 |
|
|
$ |
4,632 |
|
|
$ |
19,167 |
|
$ |
7,763 |
|
Net income per share attributable to PetIQ, Inc. Class A
common stock |
|
|
|
|
|
|
|
Basic |
|
$ |
0.32 |
|
|
$ |
0.16 |
|
|
$ |
0.66 |
|
$ |
0.27 |
|
Diluted |
|
$ |
0.32 |
|
|
$ |
0.16 |
|
|
$ |
0.66 |
|
$ |
0.26 |
|
Weighted Average
shares of Class A common stock outstanding |
|
|
|
|
|
|
|
Basic |
|
|
29,136 |
|
|
|
29,283 |
|
|
|
29,083 |
|
|
29,223 |
|
Diluted |
|
|
29,373 |
|
|
|
29,329 |
|
|
|
29,218 |
|
|
29,304 |
|
PetIQ, Inc.Condensed
Consolidated Statements of Cash Flows(Unaudited,
in 000’s)
|
|
For the Six Months Ended June 30, |
|
|
|
2023 |
|
|
|
2022 |
|
Cash flows from operating
activities |
|
|
|
|
Net income |
|
$ |
19,334 |
|
|
$ |
7,838 |
|
Adjustments to reconcile net income to net cash provided by (used
in) operating activities |
|
|
|
|
Depreciation and amortization of intangible assets and loan
fees |
|
|
19,769 |
|
|
|
17,660 |
|
Stock based compensation expense |
|
|
5,208 |
|
|
|
6,666 |
|
Other non-cash activity |
|
|
(135 |
) |
|
|
48 |
|
Changes in assets and liabilities, net of business acquisition |
|
|
|
|
Accounts receivable |
|
|
(74,468 |
) |
|
|
(54,969 |
) |
Inventories |
|
|
2,901 |
|
|
|
(63,771 |
) |
Other assets |
|
|
(481 |
) |
|
|
(409 |
) |
Accounts payable |
|
|
40,320 |
|
|
|
26,481 |
|
Accrued wages payable |
|
|
252 |
|
|
|
(2,359 |
) |
Other accrued expenses |
|
|
1,703 |
|
|
|
(2,569 |
) |
Net cash provided by (used in) operating activities |
|
|
14,403 |
|
|
|
(65,384 |
) |
Cash flows from investing activities |
|
|
|
|
Business acquisition (net of cash acquired) |
|
|
(27,634 |
) |
|
|
— |
|
Purchase of property, plant, and equipment |
|
|
(4,128 |
) |
|
|
(8,026 |
) |
Investment in subsidiary undertaking |
|
|
— |
|
|
|
— |
|
Net cash used in investing activities |
|
|
(31,762 |
) |
|
|
(8,026 |
) |
Cash flows from financing activities |
|
|
|
|
Proceeds from issuance of long-term debt |
|
|
35,000 |
|
|
|
44,000 |
|
Principal payments on long-term debt |
|
|
(38,800 |
) |
|
|
(42,800 |
) |
Principal payments on finance lease obligations |
|
|
(801 |
) |
|
|
(744 |
) |
Tax withholding payments on Restricted Stock Units |
|
|
(969 |
) |
|
|
(865 |
) |
Exercise of options to purchase Class A common stock |
|
|
— |
|
|
|
115 |
|
Net cash used in financing activities |
|
|
(5,570 |
) |
|
|
(294 |
) |
Net change in cash and cash equivalents |
|
|
(22,929 |
) |
|
|
(73,704 |
) |
Effect of exchange rate
changes on cash and cash equivalents |
|
|
101 |
|
|
|
(306 |
) |
Cash
and cash equivalents, beginning of period |
|
|
101,265 |
|
|
|
79,406 |
|
Cash and cash equivalents, end of period |
|
$ |
78,437 |
|
|
$ |
5,396 |
|
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, 2023 |
|
June 30, 2022 |
|
June 30, 2023 |
|
June 30, 2022 |
Products segment sales |
|
$ |
278,167 |
|
$ |
219,014 |
|
$ |
537,160 |
|
$ |
466,764 |
Services segment revenue: |
|
|
|
|
|
|
|
|
Same-store sales |
|
|
33,633 |
|
|
28,264 |
|
|
62,161 |
|
|
48,989 |
Non same-store sales |
|
|
2,747 |
|
|
4,736 |
|
|
5,697 |
|
|
11,956 |
Total services segment revenue |
|
$ |
36,380 |
|
$ |
33,000 |
|
$ |
67,858 |
|
$ |
60,945 |
Total net sales |
|
$ |
314,547 |
|
$ |
252,014 |
|
$ |
605,018 |
|
$ |
527,709 |
PetIQ,
Inc.Reconciliation between Selling, General &
Administrative (“SG&A”) and Adjusted
SG&A(Unaudited, in 000’s)
|
|
For the Three Months Ended |
|
For the Six Months Ended |
$'s in 000's |
|
June 30, 2023 |
|
June 30, 2022 |
|
June 30, 2023 |
|
June 30, 2022 |
SG&A |
|
$ |
55,159 |
|
|
$ |
50,595 |
|
|
$ |
98,486 |
|
|
$ |
98,831 |
|
% of Sales |
|
|
17.5 |
% |
|
|
20.1 |
% |
|
|
16.3 |
% |
|
|
18.7 |
% |
Less: |
|
|
|
|
|
|
|
|
Acquisition costs(1) |
|
|
297 |
|
|
|
156 |
|
|
|
835 |
|
|
|
156 |
|
Stock based compensation expense |
|
|
2,743 |
|
|
|
2,843 |
|
|
|
5,208 |
|
|
|
6,666 |
|
Integration costs(2) |
|
|
618 |
|
|
|
404 |
|
|
|
1,594 |
|
|
|
743 |
|
Litigation expenses |
|
|
— |
|
|
|
1,141 |
|
|
|
— |
|
|
|
3,802 |
|
Adjusted SG&A(3) |
|
$ |
51,501 |
|
|
$ |
46,051 |
|
|
$ |
90,849 |
|
|
$ |
87,464 |
|
% of Sales |
|
|
16.4 |
% |
|
|
18.3 |
% |
|
|
15.2 |
% |
|
|
17.0 |
% |
PetIQ,
Inc.Reconciliation between Net Income and Adjusted
EBITDA(Unaudited, in 000’s)
|
|
For the Three Months Ended |
|
For the Six Months Ended |
$'s in 000's |
|
June 30, 2023 |
|
June 30, 2022 |
|
June 30, 2023 |
|
June 30, 2022 |
Net income |
|
$ |
9,553 |
|
|
$ |
4,678 |
|
|
$ |
19,334 |
|
|
$ |
7,838 |
|
Plus: |
|
|
|
|
|
|
|
|
Tax expense |
|
|
192 |
|
|
|
603 |
|
|
|
640 |
|
|
|
724 |
|
Depreciation |
|
|
4,164 |
|
|
|
3,515 |
|
|
|
7,685 |
|
|
|
7,197 |
|
Amortization |
|
|
6,477 |
|
|
|
4,477 |
|
|
|
10,739 |
|
|
|
9,000 |
|
Interest expense, net |
|
|
8,824 |
|
|
|
6,299 |
|
|
|
17,556 |
|
|
|
12,420 |
|
EBITDA |
|
$ |
29,210 |
|
|
$ |
19,572 |
|
|
$ |
55,954 |
|
|
$ |
37,179 |
|
Acquisition costs(1) |
|
|
297 |
|
|
|
156 |
|
|
|
835 |
|
|
|
156 |
|
Stock based compensation expense |
|
|
2,743 |
|
|
|
2,843 |
|
|
|
5,208 |
|
|
|
6,666 |
|
Integration costs(2) |
|
|
618 |
|
|
|
404 |
|
|
|
1,594 |
|
|
|
743 |
|
Litigation expenses |
|
|
— |
|
|
|
1,141 |
|
|
|
— |
|
|
|
3,802 |
|
Adjusted EBITDA(3) |
|
$ |
32,868 |
|
|
$ |
24,116 |
|
|
$ |
63,591 |
|
|
$ |
48,546 |
|
Adjusted EBITDA Margin |
|
|
10.4 |
% |
|
|
9.6 |
% |
|
|
10.5 |
% |
|
|
9.2 |
% |
PetIQ,
Inc.Reconciliation between Net Income and Adjusted
Net Income(Unaudited, in 000’s, except for per
share amounts)
|
|
For the Three Months Ended |
|
For the Six Months Ended |
$'s in 000's |
|
June 30, 2023 |
|
June 30, 2022 |
|
June 30, 2023 |
|
June 30, 2022 |
Net income |
|
$ |
9,553 |
|
$ |
4,678 |
|
$ |
19,334 |
|
$ |
7,838 |
Plus: |
|
|
|
|
|
|
|
|
Tax expense |
|
|
192 |
|
|
603 |
|
|
640 |
|
|
724 |
Acquisition costs(1) |
|
|
297 |
|
|
156 |
|
|
835 |
|
|
156 |
Stock based compensation expense |
|
|
2,743 |
|
|
2,843 |
|
|
5,208 |
|
|
6,666 |
Integration costs(2) |
|
|
618 |
|
|
404 |
|
|
1,594 |
|
|
743 |
Litigation expenses |
|
|
— |
|
|
1,141 |
|
|
— |
|
|
3,802 |
Adjusted Net income(3) |
|
$ |
13,403 |
|
$ |
9,825 |
|
$ |
27,611 |
|
$ |
19,929 |
|
|
|
|
|
|
|
|
|
Non-GAAP adjusted EPS |
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.46 |
|
$ |
0.34 |
|
$ |
0.95 |
|
$ |
0.68 |
Diluted |
|
$ |
0.46 |
|
$ |
0.33 |
|
$ |
0.95 |
|
$ |
0.68 |
Weighted Average
shares of Class A common stock outstanding used to compute non-GAAP
adjusted EPS |
Basic |
|
|
29,136 |
|
|
29,283 |
|
|
29,083 |
|
|
29,223 |
Diluted |
|
|
29,373 |
|
|
29,329 |
|
|
29,218 |
|
|
29,304 |
(1) Acquisition costs include legal, accounting, banking,
consulting, diligence, and other costs related to completed and
contemplated acquisitions.
(2) Integration costs represent costs related to integrating the
acquired businesses including personnel costs such as severance and
retention bonuses, consulting costs, contract termination costs,
and IT conversion costs. The costs are primarily within the
Products segment.
(3) Effective December 31, 2022, the Company no longer includes
non same-store operating results related to the Services segment
wellness centers with less than six full quarters of operating
results, and pre-opening expenses, as an adjustment to its
calculation of its non-GAAP financial measures. As a result, the
following non-GAAP measures have been recast for comparability to
remove non same-store operating results for the three and six
months ended June 30, 2022 as follows:
- Adjusted SG&A - $2.0 and
$4.5 million, respectively
- Adjusted net income - $5.2 and
$12.4 million, respectively
- Adjusted EBITDA - $3.5 and
$10.6 million, respectively
PetIQ, Inc.
Calculation of Net Leverage Ratio Under
Term Loan B(Unaudited, in 000’s, except for
multiples)
|
June 30, 2023 |
Total debt |
$ |
447,849 |
|
Total Capital Leases |
|
1,722 |
|
Less Cash |
|
(78,437 |
) |
Net Debt |
|
371,134 |
|
LTM Term Loan B Adjusted
EBITDA(1) |
|
102,777 |
|
Term Loan B net leverage |
3.6x |
(1) Our Term Loan B documentation defines Adjusted EBITDA as net
income before interest, income taxes, depreciation and amortization
and a non-cash goodwill impairment charge, as further adjusted for
acquisition costs, loss on debt extinguishment and related costs,
stock based compensation expense, integration costs, litigation
expenses, and non same-store net income (loss), which we refer to
as “Term Loan B Adjusted EBITDA.” Term Loan B Adjusted EBITDA is
not a non-GAAP measure and is presented solely for purposes of
providing investors an understanding of the Company’s financial
condition and liquidity and should not be relied upon for any
purposes other than an understanding of the Company’s financial
condition and liquidity as it relates to the Company’s Term Loan
B
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