Form 8-k PetIQ Q2 2017 Earnings Release

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

 

Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): November 6, 2017

 

PETIQ, INC.

(Exact name of registrant as specified in its charter)

 

 

 

 

 

 

 

 

 

 

 

Delaware
(State or other jurisdiction
of incorporation)

 

 

 

001-38163
(Commission
File Number)

 

 

 

35-2554312
(I.R.S. Employer
Identification No.)

 

 

 

 


(Address of principal executive offices)

 

 

 

 

 

 

500 E. Shore Drive, Suite 120

Eagle, Idaho
(Address of principal executive offices)

 

 

 

83616
(Zip Code)

 

 

(208) 939-8900

(Registrant’s telephone number, including area code)

 

N/A

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

 Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

 Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

 Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

 Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act (17 CFR 230.405) or Rule 12b-2 of the Securities Exchange Act (17 CFR 240.12b-2)

 

 Indicate by check mark if the registrant has elected not to use the extended transition period for complying with new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act (17 CFR 240.13(a)-1)

 

 

 


 

Item 2.02 Results of Operations and Financial Condition.*

 

On November 6, 2017,  PetIQ, Inc. issued a press release announcing financial results for its fiscal quarter ended September 30, 2017. A copy of the press release is attached hereto as Exhibit 99.1.

 

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

 

On November 6, 2017, the Company announced that on October 31, 2017, Scott Adcock, President of PetIQ, member of the Board of Directors, and a named executive officer, tendered his resignation to the Company and resigned as a member of the Board of Directors, effective immediately.

 

Item 9.01 Financial Statements and Exhibits.

 

 

 

 

 

 

 

(d)

Exhibits:

 

Exhibit No.

    

Description

99.1*

 

Press Release dated November 6, 2017.


*The information furnished under Item 2.02 of this Current Report on Form 8-K, including Exhibit 99.1, is being furnished and shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

 

 


 

Exhibit Index

 

 

 

 

 

 

 

Exhibit No.

    

Description

99.1*

 

Press Release dated November 6, 2017.


*The information furnished under Item 2.02 of this Current Report on Form 8-K, including Exhibit 99.1, is being furnished and shall not be deemed to be “filed” for the purposes of Section 18 of the Exchange Act or incorporated by reference in any filing under the Securities Act or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.


 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

 

 

 

 

PETIQ, INC.

 

Dated: November 6, 2017 

By

/s/ John Newland

 

 

Name:

John Newland

 

 

Title:

Chief Financial Officer

 


PetIQ Q2 2017 Earnings release

Exhibit 99.1

Picture 1

PetIQ, Inc. Reports Third Quarter Fiscal 2017 Financial Results

EAGLE, Idaho – November 6, 2017 – PetIQ, Inc. (“PetIQ” or the “Company”) (NASDAQ: PETQ), a leading pet medication and wellness company, today reported financial results for its third quarter and nine months ended September 30, 2017.

Third Quarter Fiscal 2017 Highlights

·

Net sales were $60.6 million, an increase of 45.3% year-over-year

·

Net income increased $3.4 million to $0.9 million

·

Adjusted net income increased $4.4 million to $3.9 million

·

Adjusted EBITDA increased $4.2 million to $5.4 million

First Nine Months of Fiscal 2017 Highlights

·

Net sales were $214.8 million, an increase of 38.3% year-over-year

·

Net income increased $13.4 million to $11.2 million

·

Adjusted net income increased $14.5 million to $14.3 million

·

Adjusted EBITDA increased $9.7 million to $18.8 million

(All comparisons above to the three and nine months ended September 30, 2016)

“We are pleased with our broad-based success in all sales channels which fueled our 45% increase in net sales and significant increase in profitability,” said Cord Christensen, PetIQ’s Chairman and Chief Executive Officer.  “Our third quarter results reflect the successful execution of our strategic growth initiatives and our ability to generate greater expense leverage across business. Importantly, our results are on pace with what we expected, and they represent our strongest third quarter in the Company’s history. We believe we are well positioned for future growth because our mission to improve pet health by providing consumers convenient access and affordable choices to a broad portfolio of health and wellness products is increasingly resonating with customers.”

Third Quarter 2017 Financial Results

 

Net sales increased 45.3% to $60.6 million for the third quarter of 2017 compared to $41.7 million for the same period in the prior year. 

 

Gross profit was $12.5 million, or 20.7% as a percentage of net sales, compared to $6.2 million, or 14.8% as a percentage of net sales, in the same period last year. The increase in gross profit was primarily due to the significant sales growth which created improved economies of scale as well as improved sales mix of more profitable categories and continuous procurement improvements.

 

Operating income was $1.8 million, or 2.9% as a percentage of net sales, in the third quarter of 2017, compared to an operating loss of $1.8 million for the third quarter of 2016.

 

Net income was $0.9 million for the third quarter of 2017 compared to a net loss of $2.5 million for the prior year period. Adjusted net income was $3.9 million in the third quarter of 2017 which compares to an adjusted net loss of $0.5 million in the prior year period. Reported net income includes $2.3 million of expenses related to the Company’s initial public offering which closed during the third quarter. 


 

Additionally, third quarter net income includes a $0.6 million tax provision for the quarter as the Company transitioned to a taxpayer status.

Adjusted EBITDA increased $4.2 million to $5.4 million for the third quarter of 2017 compared to $1.2 million in the third quarter 2016.  Adjusted EBITDA margin increased 600 basis points to 8.9% compared to 2.9% for the third quarter of 2016.

 

Adjusted net income, EBITDA and adjusted EBITDA are Non-GAAP financial measures defined under “Non-GAAP Measures,” and are reconciled to net income in the financial tables that accompany this release.


First Nine Months of 2017 Financial Results

 

Net sales increased 38.3% to $214.8 million for the first nine months of 2017, compared to the same period in the prior year. 

 

Operating income was $13.2 million, or 6.2% of net sales for the first nine months of 2017, representing an increase of 580 basis points compared to operating income of $0.6 million, or 0.4% of net sales in the same period of 2016. 

 

Net Income was $11.2 million for the first nine months of 2017 compared to a net loss of $2.2 million for the prior year period.  Adjusted net income was $14.3 million for the nine month period ended September 2017 which compares to an adjusted net loss of $0.2 million in the prior year period.

Adjusted EBITDA increased $9.7 million to $18.8 million for the first nine months of 2017 compared to $9.1 million in the comparable period of 2016.  Adjusted EBITDA margin increased 290 basis points to 8.7% compared to 5.9% for the first nine months of 2017.

 

Balance Sheet

 

As of September 30, 2017, the Company had cash and cash equivalents of $46.5 million, compared to $0.8 million at December 31, 2017.  The outstanding balance on our revolving credit facility and term loan as of September 30, 2017 was $18.1 million, compared to $27.5 million at year end.  The increase in cash is primarily due to the receipt of $44.4 million in net proceeds associated with the Company’s IPO which closed on July 26, 2017.  The reduction of debt is due to cash generated by operations being used to pay down debt.

 

Executive Retirement

 

The Company is also announcing today that Scott Adcock has retired as Co-Founder, President and Director for health reasons, effective October 31, 2017. 

 

“Scott has been an incredible partner and his contributions to our mission have been invaluable as we transformed a vision into reality with the growth of PetIQ,” said Mr. Christensen. “I am very proud of what we have achieved together as we set out to build a strong corporate and financial foundation that would support our culture of growth and innovation.  This is a critical time for Scott to focus completely on his health and well-being and we will greatly miss his leadership and the passion and enthusiasm he brought to PetIQ.”

 

Mr. Adcock commented, “It has been an honor to partner with Cord and work with the entire PetIQ team over the last several years. With a heavy heart, I have reached the conclusion that retirement is necessary to improve my health, but I am comforted by the strengths of my colleagues who have contributed so significantly to PetIQ’s success. I am confident that the clarity of the Company’s strategic goals will ensure that it continues to thrive and achieve its fullest potential.”

 


 

Mr. Christensen concluded, “Scott’s contributions to PetIQ cannot be overstated and he will always remain part of the PetIQ family. One of his many legacies is the strength of the organization that he helped build. We are fortunate to have such a capable team in place as we move forward. John Newland, our chief financial officer, and I will assume Scott’s responsibilities. The Board wishes Scott well and will assist our executive team in determining what the organization’s needs are as we enter PetIQ’s next phase of growth and continue to deliver great value to our stockholders.” 

 

Conference Call and Webcast

 

The Company will host a conference call and webcast where members of the executive management team will discuss these results with additional comments and details today, November 6, 2017, at 5:30 p.m. ET. The conference call will be available live over the Internet through the “Investors” section of the Company’s website at www.PetIQ.com.  To participate on the live call listeners in North America may dial 877-451-6152 and international listeners may dial 201-389-0879.

 

A replay of the conference call will be archived on the Company’s website and telephonic playback will be available from 8:30 p.m. ET, November 6, 2017, through November 27, 2017. North American listeners may dial 844-512-2921 and international listeners may dial 412-317-6671 the passcode is 13671993.

 

About PetIQ

 

PetIQ is a rapidly growing pet health and wellness company, with a mission to make pet lives better by educating pet parents on the importance of regular Veterinary care and Veterinary-recommended pet products.  PetIQ has given consumers convenient access and affordable choices to a broad portfolio of pet health and wellness products across a network of leading national retail stores in mass, club, grocery, pharmacy, and e-commerce channels.  PetIQ believes that pets are an important part of the family and deserve the best pet care we can give them.  For more information, visit www.PetIQ.com. For more information, visit www.PetIQ.com.

 

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, our dependency on a limited number of customers; our ability to implement our growth strategy effectively; our ability to achieve or sustain profitability; competition from veterinarians and others in our industry; failure of the Fairness to Pet Owners Act of 2017 to become law; 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 successfully grow our business through acquisitions; our ability to introduce new products and improve existing products; our failure to protect our intellectual property; costs associated with governmental regulation; risks related to our international operations;


 

our ability to keep and retain key employees; and the risks set forth under the "Risk Factors' section of the final prospectus for PetIQ, Inc., dated July 20, 2017, and filed with the SEC on July 21, 2017. 

 

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, EBITDA and Adjusted EBITDA.

 

Adjusted Net Income consists of GAAP Net income adjusted for tax expense, costs to become a public company, and stock based compensation expense. 

 

EBITDA represents net income before interest, income taxes, and depreciation and amortization. Adjusted EBITDA represents EBITDA plus loss on debt extinguishment, management fees, stock based compensation expense, and litigation expenses. Adjusted EBITDA adjusts 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 and (ii) to evaluate 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 Adjusted Net Income, EBITDA and Adjusted EBITDA 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, EBITDA and Adjusted EBITDA 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, EBITDA and Adjusted EBITDA may not be comparable to other similarly titled measures computed by other companies, because all companies do not calculate Adjusted Net Income, EBITDA and Adjusted EBITDA in the same manner.  Our management does not, and you should not, consider Adjusted Net Income, EBITDA or Adjusted EBITDA in isolation or as an alternative to financial measures determined in accordance with GAAP. The principal limitation of Adjusted Net Income, EBITDA 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 net income, the most comparable GAAP measure, in the financial tables that accompany this release.

 

CONTACT:

 

 

 

Investor Relations Contact:

 

Media Relations Contact:

Katie Turner

Cory Ziskind

ICR

ICR

646-277-1228

646-277-1232

katie.turner@icrinc.com 

cory.ziskind@icrinc.com

 


 

 

PetIQ, Inc. Balance sheet

(unaudited, dollars in thousands)

 

 

 

 

 

 

 

 

    

September 30, 2017

    

December 31, 2016

Current assets

 

 

 

 

 

 

Cash and cash equivalents

 

$

46,536

 

$

767

Accounts receivable, net of allowance for doubtful accounts

 

 

24,841

 

 

17,195

Inventories

 

 

34,654

 

 

34,232

Supplier prepayments

 

 

2,251

 

 

2,985

Other current assets

 

 

1,471

 

 

1,358

Total current assets

 

 

109,753

 

 

56,537

Property, plant and equipment, net

 

 

14,865

 

 

13,044

Restricted deposits

 

 

200

 

 

250

Deferred tax assets

 

 

9,707

 

 

 —

Other non-current assets

 

 

1,932

 

 

2,826

Intangible assets, net of accumulated amortization

 

 

3,522

 

 

4,054

Goodwill

 

 

5,063

 

 

4,619

Total assets

 

$

145,042

 

$

81,330

Liabilities and member's equity

 

 

  

 

 

  

Current liabilities

 

 

  

 

 

  

Accounts payable

 

$

11,860

 

$

9,333

Accrued wages payable

 

 

1,691

 

 

1,100

Accrued interest payable

 

 

112

 

 

44

Other accrued expenses

 

 

2,137

 

 

277

Current portion of long-term debt and capital leases

 

 

145

 

 

2,321

Total current liabilities

 

 

15,945

 

 

13,075

Non-current liabilities

 

 

  

 

 

  

Long-term debt

 

 

19,928

 

 

25,158

Obligations under capital leases, less current installments

 

 

403

 

 

434

Deferred acquisition liability

 

 

 —

 

 

1,303

Other non-current liabilities

 

 

465

 

 

378

Total non-current liabilities

 

 

20,796

 

 

27,273

Commitments and contingencies

 

 

  

 

 

  

Equity

 

 

  

 

 

  

Members equity

 

 

 —

 

 

42,941

Additional Paid-in capital

 

 

71,192

 

 

 —

Class A common stock, par value $.001 per share, 125,000,000 shares authorized, 13,222,583 shares issued and outstanding September 30, 2017

 

 

13

 

 

 —

Class B common stock, par value $.001 per share, 8,401,000 shares authorized, 8,268,188 shares issued and outstanding at September 30, 2017

 

 

 8

 

 

 —

Accumulated deficit

 

 

(226)

 

 

 —

Accumulated other comprehensive loss

 

 

(684)

 

 

(1,940)

Total member's equity

 

 

70,303

 

 

41,001

Non-controlling interest

 

 

37,998

 

 

(19)

Total equity

 

 

108,301

 

 

40,982

Total liabilities and equity

 

$

145,042

 

$

81,330

 


 

PetIQ, Inc.  Statement of Comprehensive Income

(unaudited, dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

Nine months ended

 

    

September 30, 2017

    

September 30, 2016

    

September 30, 2017

    

September 30, 2016

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

60,554

 

$

41,671

 

$

214,761

 

$

155,249

Cost of sales

 

 

48,037

 

 

35,511

 

 

174,093

 

 

130,356

Gross profit

 

 

12,517

 

 

6,160

 

 

40,668

 

 

24,893

Operating expenses

 

 

  

 

 

  

 

 

  

 

 

  

General and administrative expenses

 

 

10,739

 

 

7,942

 

 

27,421

 

 

24,307

Operating income (loss)

 

 

1,778

 

 

(1,782)

 

 

13,247

 

 

586

Interest expense, net

 

 

(352)

 

 

(737)

 

 

(1,351)

 

 

(2,389)

Foreign currency gain/(loss), net

 

 

(31)

 

 

 2

 

 

(152)

 

 

(83)

Loss on debt extinguishment

 

 

 —

 

 

 —

 

 

 —

 

 

(993)

Other income, net

 

 

14

 

 

 5

 

 

14

 

 

661

Total other expense, net

 

 

(369)

 

 

(730)

 

 

(1,489)

 

 

(2,804)

Pretax net income (loss)

 

 

1,409

 

 

(2,512)

 

 

11,758

 

 

(2,218)

Income tax expense

 

 

(550)

 

 

 —

 

 

(550)

 

 

 —

Net income (loss)

 

 

859

 

 

(2,512)

 

 

11,208

 

 

(2,218)

Net income (loss) attributable to noncontrolling interest

 

 

1,085

 

 

(2,512)

 

 

11,434

 

 

(2,218)

Net loss attributable to PetIQ

 

$

(226)

 

$

 —

 

$

(226)

 

$

 —

Comprehensive income/(loss)

 

 

  

 

 

  

 

 

  

 

 

  

Net income (loss)

 

$

859

 

$

(2,512)

 

$

11,208

 

$

(2,218)

Foreign currency translation adjustment

 

 

314

 

 

(351)

 

 

829

 

 

(1,407)

Comprehensive income/(loss)

 

 

1,173

 

 

(2,863)

 

 

12,037

 

 

(3,625)

Comprehensive income attributable to noncontrolling interest

 

 

1,206

 

 

(2,863)

 

 

12,070

 

 

(3,625)

Comprehensive loss attributable to member/PetIQ

 

$

(33)

 

$

 —

 

$

(33)

 

$

 —

Net loss per share attributable to PetIQ, Inc. Class A common stock(1)

 

 

 

 

 

 

 

 

 

 

 

 

-Basic

 

$

(0.02)

 

 

 —

 

$

(0.02)

 

 

 —

-Diluted

 

$

(0.02)

 

 

 —

 

$

(0.02)

 

 

 —

Weighted Average shares of Class A common stock outstanding

 

 

 

 

 

 

 

 

 

 

 

 

-Basic

 

 

13,222,583

 

 

 —

 

 

13,222,583

 

 

 —

-Diluted

 

 

13,222,583

 

 

 —

 

 

13,222,583

 

 

 —

 

(1)

Basic and Diluted earnings per share is applicable only for periods after the Company’s IPO. 

 

 

 

 


 

 

PetIQ, LLC. Statement of Cash Flows

(unaudited, dollars in thousands)

 

 

 

 

 

 

 

 

 

    

 

    

 

 

 

September 30, 2017

    

September 30, 2016

Cash flows from operating activities

 

 

 

 

 

 

Net income

 

$

11,208

 

$

(2,218)

Adjustments to reconcile net income to net cash used for operating activities

 

 

  

 

 

  

Depreciation and amortization of intangible assets and loan fees

 

 

2,725

 

 

2,885

Loss on disposition of property

 

 

14

 

 

52

Foreign exchange loss on liabilities

 

 

204

 

 

52

Stock based compensation expense

 

 

246

 

 

 —

Deferred tax adjustment

 

 

351

 

 

 —

Warranty settlement gain

 

 

 —

 

 

(645)

Changes in assets and liabilities

 

 

  

 

 

  

Accounts receivable

 

 

(7,257)

 

 

(882)

Inventories

 

 

(316)

 

 

(2,015)

Prepaid expenses and other assets

 

 

1,137

 

 

3,663

Accounts payable

 

 

1,797

 

 

(1,125)

Accrued wages payable

 

 

570

 

 

(940)

Other accrued expenses

 

 

287

 

 

(163)

Net cash provided by (used in) operating activities

 

 

10,966

 

 

(1,336)

Cash flows from investing activities

 

 

  

 

 

  

Purchase of property, plant, and equipment and intangibles

 

 

(3,558)

 

 

(1,604)

Net cash used in investing activities

 

 

(3,558)

 

 

(1,604)

Cash flows from financing activities:

 

 

  

 

 

  

Proceeds from issuance of long term debt

 

 

206,020

 

 

167,052

Principal payments on long term debt

 

 

(213,522)

 

 

(172,785)

Proceeds from Initial Public Offering (IPO) of Class A Shares

 

 

104,010

 

 

 —

Repayment of Preference notes

 

 

(55,960)

 

 

 —

Change in restricted cash and deposits

 

 

50

 

 

6,894

Purchase of LLC units from Continuing LLC Owners

 

 

(2,133)

 

 

 —

Principal payments on capital lease obligations

 

 

(86)

 

 

(62)

Payment of deferred financing fees and debt discount

 

 

(42)

 

 

(248)

Net cash provided by financing activities

 

 

38,337

 

 

851

Net change in cash and cash equivalents

 

 

45,745

 

 

(2,089)

Effect of exchange rate changes on cash and cash equivalents

 

 

24

 

 

(206)

Cash and cash equivalents, beginning of period

 

 

767

 

 

3,250

Cash and cash equivalents, end of period

 

$

46,536

 

$

955

Supplemental cash flow information

 

 

 

 

 

 

Interest paid

 

$

1,116

 

$

2,150

Property, plant, and equipment acquired through accounts payable

 

 

(53)

 

 

(46)

Capital lease additions

 

 

17

 

 

127

Issuance of preference notes for LLC Interests

 

 

55,960

 

 

 —

Establishment of deferred tax asset from step-up in basis

 

 

9,823

 

 

 —

Accrued tax distribution

 

 

709

 

 

 —

 

 

 


 

 

PetIQ, Inc.

Reconciliation between Net Income and Adjusted EIBTDA

(Unaudited, Dollars in Thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

Nine months ended

$'s in 000's

 

September 30, 2017

 

September 30, 2016

 

September 30, 2017

 

September 30, 2016

Net income

    

$

859

    

$

(2,512)

    

$

11,208

    

$

(2,218)

Plus:

 

 

  

 

 

  

 

 

  

 

 

  

Tax expense

 

 

550

 

 

 —

 

 

550

 

 

 —

Depreciation

 

$

684

 

$

375

 

$

1,795

 

$

1,350

Amortization

 

 

261

 

 

264

 

 

782

 

 

808

Interest

 

 

352

 

 

737

 

 

1,351

 

 

2,389

EBITDA

 

$

2,706

 

$

(1,136)

 

$

15,686

 

$

2,329

Loss on extinguishment and related costs(1)

 

 

 —

 

 

 —

 

 

 —

 

 

993

Management fees(2)

 

 

158

 

 

208

 

 

545

 

 

508

Litigation expenses(3)

 

 

 —

 

 

41

 

 

 —

 

 

3,226

Costs associated with becoming a public company

 

 

2,275

 

 

2,042

 

 

2,275

 

 

2,042

Stock based compensation expense

 

 

246

 

 

 —

 

 

246

 

 

 —

Adjusted EBITDA

 

$

5,385

 

$

1,155

 

$

18,752

 

$

9,098

 

 

 

(1)

Loss on debt extinguishment reflects costs relating to the refinancing of our prior credit facility, including a write-off of unamortized loan fees, legal fees and termination fees.

(2)

Represents annual fees paid pursuant to our management agreements with Eos, Highland and Labore. The management agreements will terminate in connection with an initial public offering; however, we will pay fees to members of our board of directors following the offering.

(3)

These litigation expenses relate to cases involving the Company that were favorably resolved in the second quarter of 2016.

PetIQ, Inc.

Reconciliation between Net Income and Adjusted Net Income

(Unaudited, Dollars in Thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

Nine months ended

 

 

September 30, 2017

 

September 30, 2016

 

September 30, 2017

 

September 30, 2016

Net income

    

$

859

    

$

(2,512)

    

$

11,208

    

$

(2,218)

Plus:

 

 

 

 

 

 

 

 

 

 

 

 

Tax expense

 

 

550

 

 

 —

 

 

550

 

 

 —

Stock based compensation expense

 

 

246

 

 

 —

 

 

246

 

 

 —

Costs associated with becoming a public company

 

 

2,275

 

 

2,042

 

 

2,275

 

 

2,042

Adjusted Net income

 

$

3,930

 

$

(470)

 

$

14,279

 

$

(176)

 

 

 


 

 

PetIQ, Inc. Segment Review

(Unaudited, Dollars in Thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

Nine months ended

 

    

September 30, 2017

    

September 30, 2016

    

September 30, 2017

    

September 30, 2016

Net Sales

 

 

  

 

 

  

 

 

  

 

 

  

Domestic

 

$

59,328

 

$

40,513

 

$

211,095

 

$

151,792

International

 

 

1,226

 

 

1,158

 

 

3,666

 

 

3,457

Net Sales

 

 

60,554

 

 

41,671

 

 

214,761

 

 

155,249

Gross Profit

 

 

  

 

 

  

 

 

  

 

 

  

Domestic

 

$

11,974

 

$

5,665

 

$

39,074

 

$

23,424

International

 

 

543

 

 

495

 

 

1,594

 

 

1,469

Gross Profit

 

 

12,517

 

 

6,160

 

 

40,668

 

 

24,893

General and administrative expenses

 

 

  

 

 

  

 

 

  

 

 

  

Domestic

 

$

10,207

 

$

7,522

 

$

25,977

 

$

22,991

International

 

 

532

 

 

420

 

 

1,444

 

 

1,316

General and administrative expenses

 

 

10,739

 

 

7,942

 

 

27,421

 

 

24,307

Operating income

 

 

  

 

 

  

 

 

  

 

 

  

Domestic

 

$

1,767

 

$

(1,857)

 

$

13,097

 

$

433

International

 

 

11

 

 

75

 

 

150

 

 

153

Operating income

 

 

1,778

 

 

(1,782)

 

 

13,247

 

 

586