PetIQ, Inc. Reports Fourth Quarter and Full Year 2023 Financial Results
Record Full Year 2023 Net Sales Increase 19.6% Year-Over-Year to Over
Reports Highest Annual Cash from Operations in the Company's History of
Provides First Quarter 2024 and Full Year 2024 Outlook
Christensen continued, “We made significant strategic investments in marketing during the year to support the growth and development of
Full Year 2023 Highlights Compared to Prior Year
- Record net sales of
$1,102.0 million , an increase of 19.6%, above the high-end of the Company's most recent guidance of$1,060.0 million to$1,080.0 million and well-ahead of the Company's original outlook of$970.0 million to$1,030.0 million - Product segment net sales of
$968.2 million compared to$800.3 million , an increase of 21.0% - Net sales for PetIQ’s manufactured products increased 28% and outperformed the Company's growth expectations for the year
- Services segment net revenue of
$133.8 million compared to$121.2 million , an increase of 10.4% - Gross profit of
$252.7 million compared to$209.7 million , an increase of 20.5% - Gross margin increased 10 basis points to 22.9%
- Adjusted gross profit of
$254.9 million and adjusted gross margin of 23.1% - Net income of
$2.1 million , or earnings per diluted share ("EPS") of$0.07 , includes$13 .6 million of total restructuring attributable to the Company's previously disclosed Services segment optimization and a$7.7 million non-cash asset charge for the Company's foreign subsidiary's related valuation and expected sale - Adjusted net income of
$36 .6 million, or adjusted diluted EPS of$1.24 , an increase of 103.3% compared to adjusted net income of$17.7 million , or adjusted diluted EPS of$0.61 - Adjusted EBITDA of
$104.7 million compared to$77.7 million , an increase of 34.8%, above the high-end of the Company's most recent guidance of$99 million to$103 million and well-ahead of the Company's original outlook of$86 million to$92 million - Highest reported cash from operations and free cash flow in the Company's history of
$61.9 million and$52.7 million , respectively, for the year endedDecember 31, 2023 - Net leverage as measured under the Company's credit agreement was a record low 2.9x as of
December 31, 2023 compared to 3.7x as ofDecember 31, 2022
Fourth Quarter 2023 Highlights Compared to Prior Year Period
- Net sales of
$219.9 million , an increase of 19.5% - Product segment net sales of
$191.3 million compared to$157.3 million , an increase of 21.6% - Net sales for PetIQ’s manufactured products increased 36% and outperformed the Company's growth expectations for the quarter
- Services segment net revenue of
$28.6 million compared to$26.8 million , an increase of 6.9% - Gross profit of
$44.0 million compared to$39.3 million , an increase of 12.0% - Gross margin decreased 130 basis points to 20.0% primarily due to 149 wellness center closures in 2023, of which 104 wellness center closed in the fourth quarter, associated with Services segment optimization
- Adjusted gross profit of
$45.6 million and adjusted gross margin of 20.7% - Net loss of
$17.5 million , or a loss per share of$0.60 , includes the aforementioned total restructuring and related non-cash asset charges of$5.1 million and$7.7 million , respectively - Adjusted net loss of
$3.4 million , or adjusted loss per share of$0.12 - Adjusted EBITDA of
$12.0 million
Fourth Quarter 2023 Financial Results
Net sales were
Products segment net sales of
Services segment revenue for the fourth quarter of 2023 increased 6.9% to
Fourth quarter 2023 gross profit was
Selling, general and administrative expenses (“SG&A”) was
Restructuring and related charges attributable to the Services segment optimization were
Net loss was
Cash Flow and Balance Sheet
The Company ended the quarter with total cash and cash equivalents of
Adjusted gross profit, adjusted gross margin, adjusted SG&A, adjusted SG&A as a percent of net sales, adjusted net income, adjusted EPS, adjusted EBITDA, adjusted EBITDA margin and free cash flow are non-GAAP financial measures. The Company believes these non-GAAP financial measures provide useful additional information to investors about current trends in the Company's operations and are useful for period-over-period comparisons of operations. In addition, management uses these non-GAAP financial measures to assess operating performance and for business planning purposes. 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.
Outlook
For the full year 2024 and first quarter of 2024 the Company is providing its outlook inclusive of its Services segment optimization, the expected sale of its foreign subsidiary, Mark & Chappell and a return to more normal flea and tick seasonality as compared to the record seasonal patterns experienced in 2023. Additionally, for the year ending
For the full year 2024 the Company expects:
- Net sales of
$1,130.0 million to$1,180.0 million - Adjusted EBITDA of
$109.0 million to$114.0 million
For the first quarter of 2024 the Company expects:
- Net sales of
$290.0 million to$310.0 million - Adjusted EBITDA of
$31.0 million to$33.0 million
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 first quarter ending
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
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
About
Contact: 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, including inflation and interest rates; overall consumer spending in the industry; our ability to successfully grow our business through acquisitions and our ability to integrate acquisitions; our dependency on a limited number of customers; our ability to implement our growth strategy effectively; our ability to continue to grow our Services segment; disruptions in our manufacturing, shipping, transportation and distribution chains; competition from veterinarians and others in our industry; reputational damage to our brands; 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; cyber security risks, including breaches that result in business interruption and data loss; our substantial indebtedness and ability to raise additional capital as needed; and the risks set forth under the “Risk Factors” section of our Annual Report on Form 10-K for the year ended
Non-GAAP Financial Measures
In addition to financial results reported in accordance with
Adjusted gross profit consists of gross profit adjusted for restructuring and purchase accounting adjustment to inventory. Adjusted gross margin is adjusted gross margin stated as a percentage of total net sales.
Adjusted SG&A consists of SG&A adjusted for acquisition costs, stock-based compensation expense, integration and business transformation costs, and litigation expenses. Adjusted SG&A is adjusted SG&A as a percentage of total net sales.
Adjusted net (loss) income consists of net income adjusted for tax expense, impairment and other asset charges, acquisition costs, integration and business transformation costs, litigation expenses, restructuring 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.
EBITDA represents net income before interest, income taxes, impairment and other asset charges, 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, restructuring, stock-based compensation expense, litigation expenses, and integration and business transformation costs. Adjusted EBITDA margin is adjusted EBITDA stated as a percentage of total 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.
Free cash flow consists of cash provided by operations less capital expenditures.
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.
Consolidated Balance Sheets (Unaudited, in 000’s except for per share amounts) |
||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 116,369 | $ | 101,265 | ||||
| Accounts receivable, net | 142,511 | 118,004 | ||||||
| Inventories | 159,309 | 142,605 | ||||||
| Other current assets | 12,645 | 8,238 | ||||||
| Total current assets | 430,834 | 370,112 | ||||||
| Property, plant and equipment, net | 57,097 | 73,395 | ||||||
| Operating lease right of use assets | 19,079 | 18,231 | ||||||
| Other non-current assets | 2,083 | 1,373 | ||||||
| Intangible assets, net | 159,729 | 172,479 | ||||||
| 199,404 | 183,306 | |||||||
| Total assets | $ | 868,226 | $ | 818,896 | ||||
| Liabilities and equity | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | 139,264 | $ | 112,995 | ||||
| Accrued wages payable | 16,734 | 11,512 | ||||||
| Accrued interest payable | 6,636 | 1,912 | ||||||
| Other accrued expenses | 10,692 | 7,725 | ||||||
| Current portion of operating leases | 7,608 | 6,595 | ||||||
| Current portion of long-term debt and finance leases | 8,595 | 8,751 | ||||||
| Total current liabilities | 189,529 | 149,490 | ||||||
| Operating leases, less current installments | 13,763 | 12,405 | ||||||
| Long-term debt, less current installments | 437,820 | 443,276 | ||||||
| Finance leases, less current installments | 516 | 907 | ||||||
| Other non-current liabilities | 3,600 | 1,025 | ||||||
| Total non-current liabilities | 455,699 | 457,613 | ||||||
| Equity | ||||||||
| Additional paid-in capital | 387,349 | 378,709 | ||||||
| Class A common stock, par value |
29 | 29 | ||||||
| Class B common stock, par value |
— | — | ||||||
| Class A treasury stock, at cost, 373 and 373 shares, respectively | (3,857 | ) | (3,857 | ) | ||||
| Accumulated deficit | (160,602 | ) | (162,733 | ) | ||||
| Accumulated other comprehensive loss | (1,706 | ) | (2,224 | ) | ||||
| Total stockholders' equity | 221,213 | 209,924 | ||||||
| Non-controlling interest | 1,785 | 1,869 | ||||||
| Total equity | 222,998 | 211,793 | ||||||
| Total liabilities and equity | $ | 868,226 | $ | 818,896 | ||||
Consolidated Statements of Operations (Unaudited, in 000’s, except for per share amounts) |
|||||||||||||||
| For the Three Months Ended | For the Year Ended | ||||||||||||||
| Product sales | $ | 191,327 | $ | 157,324 | $ | 968,151 | $ | 800,305 | |||||||
| Services revenue | 28,600 | 26,755 | 133,812 | 121,208 | |||||||||||
| Total net sales | 219,927 | 184,079 | 1,101,963 | 921,513 | |||||||||||
| Cost of products sold | 146,807 | 120,715 | 732,422 | 606,548 | |||||||||||
| Cost of services | 29,130 | 24,080 | 116,801 | 105,302 | |||||||||||
| Total cost of sales | 175,937 | 144,795 | 849,223 | 711,850 | |||||||||||
| Gross profit | 43,990 | 39,284 | 252,740 | 209,663 | |||||||||||
| Operating expenses | |||||||||||||||
| Selling, general and administrative expenses | 42,729 | 37,747 | 196,236 | 182,561 | |||||||||||
| Restructuring(1) | 3,516 | — | 11,751 | — | |||||||||||
| Impairment and other asset charges(2) | 7,680 | — | 7,680 | 47,264 | |||||||||||
| Operating (loss) income | (9,935 | ) | 1,537 | 37,073 | (20,162 | ) | |||||||||
| Interest expense, net | 8,410 | 7,678 | 34,547 | 27,374 | |||||||||||
| Other expense (income), net | 2 | (98 | ) | 160 | (130 | ) | |||||||||
| Total other expense, net | 8,412 | 7,580 | 34,707 | 27,244 | |||||||||||
| Pretax net (loss) income | (18,347 | ) | (6,043 | ) | 2,366 | (47,406 | ) | ||||||||
| Income tax benefit (expense) | 1,096 | (845 | ) | 173 | (1,214 | ) | |||||||||
| Net (loss) income | (17,251 | ) | (6,888 | ) | 2,539 | (48,620 | ) | ||||||||
| Net (loss) income attributable to non-controlling interest | 236 | (52 | ) | 408 | (412 | ) | |||||||||
| Net (loss) income attributable to |
$ | (17,487 | ) | $ | (6,836 | ) | $ | 2,131 | $ | (48,208 | ) | ||||
| Net (loss) income per share attributable to |
|||||||||||||||
| Basic | $ | (0.60 | ) | $ | (0.24 | ) | $ | 0.07 | $ | (1.65 | ) | ||||
| Diluted | $ | (0.60 | ) | $ | (0.24 | ) | $ | 0.07 | $ | (1.65 | ) | ||||
| Weighted Average shares of Class A common stock outstanding | |||||||||||||||
| Basic | 29,193 | 28,967 | 29,135 | 29,159 | |||||||||||
| Diluted | 29,193 | 28,967 | 29,530 | 29,159 | |||||||||||
(1) Restructuring charges include accelerated depreciation and amortization, variable lease expenses, lease termination costs, and other miscellaneous costs.
(2) Impairment and other asset charges includes asset charges associated with the Company committing to a plan to sell its foreign subsidiary, Mark & Chappell during the year ended
Consolidated Statements of Cash Flows (Unaudited, in 000’s) |
||||||||
| Year Ended |
||||||||
| 2023 | 2022 | |||||||
| Cash flows from operating activities | ||||||||
| Net income (loss) | $ | 2,539 | $ | (48,620 | ) | |||
| Adjustments to reconcile net income (loss) to net cash provided by operating activities | ||||||||
| Depreciation and amortization of intangible assets and loan fees | 44,498 | 35,468 | ||||||
| Loss on disposition of property, plant, and equipment | 8 | 438 | ||||||
| Stock based compensation expense | 9,468 | 11,363 | ||||||
| Deferred tax adjustment | (172 | ) | 599 | |||||
| Impairment and other asset charges | 7,680 | 47,264 | ||||||
| Other non-cash activity | (85 | ) | (385 | ) | ||||
| Changes in assets and liabilities, net of business acquisition | ||||||||
| Accounts receivable | (24,457 | ) | (4,137 | ) | ||||
| Inventories | (16,041 | ) | (46,297 | ) | ||||
| Other assets | (4 | ) | 1,093 | |||||
| Accounts payable | 25,950 | 58,546 | ||||||
| Accrued wages payable | 5,342 | (1,225 | ) | |||||
| Other accrued expenses | 7,161 | (6,083 | ) | |||||
| Net cash provided by operating activities | 61,887 | 48,024 | ||||||
| Cash flows from investing activities | ||||||||
| Purchase of property, plant, and equipment | (9,145 | ) | (11,973 | ) | ||||
| Business acquisitions (net of cash acquired) | (27,634 | ) | — | |||||
| Net cash used in investing activities | (36,779 | ) | (11,973 | ) | ||||
| Cash flows from financing activities | ||||||||
| Proceeds from issuance of long-term debt | 35,000 | 59,000 | ||||||
| Principal payments on long-term debt | (42,600 | ) | (66,600 | ) | ||||
| Tax distributions to LLC Owners | (165 | ) | — | |||||
| Principal payments on finance lease obligations | (1,494 | ) | (1,493 | ) | ||||
| Tax withholding payments on Restricted Stock Units | (984 | ) | (875 | ) | ||||
| Stock repurchase | — | (3,857 | ) | |||||
| Exercise of options to purchase Class A common stock | 54 | 115 | ||||||
| Net cash used in financing activities | (10,189 | ) | (13,710 | ) | ||||
| Net change in cash and cash equivalents | 14,919 | 22,341 | ||||||
| Effect of exchange rate changes on cash and cash equivalents | 185 | (482 | ) | |||||
| Cash and cash equivalents, beginning of period | 101,265 | 79,406 | ||||||
| Cash and cash equivalents, end of period | $ | 116,369 | $ | 101,265 | ||||
Reconciliation between Net (Loss) Income and Adjusted EBITDA (Unaudited, in 000’s) |
|||||||||||||||
| For the Three Months Ended | For the Year Ended | ||||||||||||||
| $'s in 000's | |||||||||||||||
| Net (loss) income | $ | (17,251 | ) | $ | (6,888 | ) | $ | 2,539 | $ | (48,620 | ) | ||||
| Plus: | |||||||||||||||
| Tax (benefit) expense | (1,096 | ) | 845 | (173 | ) | 1,214 | |||||||||
| Depreciation(1) | 6,237 | 3,747 | 24,773 | 14,520 | |||||||||||
| Amortization | 4,512 | 4,477 | 19,797 | 18,079 | |||||||||||
| Impairment and other asset charges(2) | 7,680 | — | 7,680 | 47,264 | |||||||||||
| Interest expense, net | 8,410 | 7,678 | 34,547 | 27,374 | |||||||||||
| EBITDA | $ | 8,492 | $ | 9,860 | $ | 89,163 | $ | 59,831 | |||||||
| Acquisition costs(3) | 451 | 273 | 1,164 | 1,464 | |||||||||||
| Stock based compensation expense | 1,409 | 2,459 | 9,468 | 11,363 | |||||||||||
| Integration and business transformation costs(4) | 238 | 228 | 2,316 | 1,171 | |||||||||||
| Litigation expenses | — | 60 | 31 | 3,862 | |||||||||||
| Restructuring(5) | 1,414 | — | 2,564 | — | |||||||||||
| Adjusted EBITDA | $ | 12,004 | $ | 12,879 | $ | 104,706 | $ | 77,691 | |||||||
| Adjusted EBITDA Margin | 5.5 | % | 7.0 | % | 9.5 | % | 8.4 | % | |||||||
Reconciliation between Gross Profit and Adjusted Gross Profit (Unaudited, in 000’s) |
|||||||||||||||
| For the Three Months Ended | For the Year Ended | ||||||||||||||
| $'s in 000's | |||||||||||||||
| Gross profit | $ | 43,990 | $ | 39,284 | $ | 252,740 | $ | 209,663 | |||||||
| Plus: | |||||||||||||||
| Restructuring(6) | 1,604 | — | 1,854 | — | |||||||||||
| Purchase accounting adjustment to inventory related to acquisition of R&R | — | — | 320 | — | |||||||||||
| Adjusted gross profit | $ | 45,594 | $ | 39,284 | $ | 254,914 | $ | 209,663 | |||||||
| Gross Margin | 20.0 | % | 21.3 | % | 22.9 | % | 22.8 | % | |||||||
| Adjusted Gross Margin | 20.7 | % | 21.3 | % | 23.1 | % | 22.8 | % | |||||||
Reconciliation between Selling, General & Administrative (“SG&A”) and Adjusted SG&A (Unaudited, in 000’s, Except for Percentages) |
||||||||||||||||
| For the Three Months Ended | For the Year Ended | |||||||||||||||
| $'s in 000's | ||||||||||||||||
| SG&A | $ | 42,729 | $ | 37,747 | $ | 196,236 | $ | 182,561 | ||||||||
| % of Total |
19.4 | % | 20.5 | % | 17.8 | % | 19.8 | % | ||||||||
| Less: | ||||||||||||||||
| Acquisition costs(3) | 451 | 273 | 1,164 | 1,464 | ||||||||||||
| Stock based compensation expense | 1,409 | 2,459 | 9,468 | 11,363 | ||||||||||||
| Integration and business transformation costs(4) | 238 | 228 | 1,996 | 1,171 | ||||||||||||
| Litigation expenses | — | 60 | 31 | 3,862 | ||||||||||||
| Adjusted SG&A | $ | 40,631 | $ | 34,727 | $ | 183,577 | $ | 164,701 | ||||||||
| % of Total |
18.5 | % | 18.9 | % | 16.7 | % | 17.9 | % | ||||||||
Calculation of Total Restructuring Expenses (Unaudited, in 000’s) |
|||||||||||||||||
| For the Three Months Ended |
|||||||||||||||||
| $'s in 000's | Expenses (Gains) | Original Liability |
Cash Payments | Non-Cash Amounts | Liability at |
||||||||||||
| Included in Cost of services | |||||||||||||||||
| Inventory reserve | $ | 638 | $ | — | $ | — | $ | (638 | ) | $ | — | ||||||
| Severance | 966 | — | (966 | ) | — | — | |||||||||||
| Total in Cost of services | $ | 1,604 | $ | — | $ | (966 | ) | $ | (638 | ) | $ | — | |||||
| Included in Restructuring | |||||||||||||||||
| Accelerated depreciation - property, plant and equipment | $ | 2,585 | $ | — | $ | — | $ | (2,585 | ) | $ | — | ||||||
| Accelerated amortization - operating lease right of use assets | 1,121 | — | — | $ | (1,121 | ) | — | ||||||||||
| Lease termination gain | (897 | ) | 2,722 | — | — | 1,825 | |||||||||||
| Variable lease expenses | 707 | 900 | (597 | ) | — | 1,010 | |||||||||||
| Total in Restructuring | $ | 3,516 | $ | 2,722 | $ | (597 | ) | $ | (3,706 | ) | $ | 2,835 | |||||
| Total Restructuring Expenses | $ | 5,120 | $ | 2,722 | $ | (1,563 | ) | $ | (4,344 | ) | $ | 2,835 | |||||
| For the Twelve Months Ended |
|||||||||||||||||
| $'s in 000's | Expenses (Gains) | Original Lease Liability | Cash Payments | Non-Cash Amounts | Liability at |
||||||||||||
| Included in Cost of services | |||||||||||||||||
| Inventory reserve | $ | 888 | $ | — | $ | — | $ | (888 | ) | $ | — | ||||||
| Severance | 966 | — | (966 | ) | — | — | |||||||||||
| Total in Cost of services | $ | 1,854 | $ | — | $ | (966 | ) | $ | (888 | ) | $ | — | |||||
| Included in Restructuring | |||||||||||||||||
| Accelerated depreciation - property, plant and equipment | $ | 8,165 | $ | — | $ | — | $ | (8,165 | ) | $ | — | ||||||
| Accelerated amortization - operating lease right of use assets | 2,876 | — | — | (2,876 | ) | — | |||||||||||
| Lease termination gain | (897 | ) | 2,722 | — | — | 1,825 | |||||||||||
| Variable lease expenses | 1,607 | — | (597 | ) | — | 1,010 | |||||||||||
| Total in Restructuring | $ | 11,751 | $ | 2,722 | $ | (597 | ) | $ | (11,041 | ) | $ | 2,835 | |||||
| Total Restructuring Expenses | $ | 13,605 | $ | 2,722 | $ | (1,563 | ) | $ | (11,929 | ) | $ | 2,835 | |||||
Summary Segment Results (Unaudited, in 000’s) |
||||||||||||
| For the Three Months Ended | For the Year Ended | |||||||||||
| $'s in 000's | ||||||||||||
| Products segment sales | $ | 191,327 | $ | 157,324 | $ | 968,151 | $ | 800,305 | ||||
| Services segment revenue: | ||||||||||||
| Same-store sales | 27,191 | 23,846 | 125,137 | 102,426 | ||||||||
| Non same-store sales | 1,409 | 2,909 | 8,675 | 18,782 | ||||||||
| Total services segment revenue | $ | 28,600 | $ | 26,755 | $ | 133,812 | $ | 121,208 | ||||
| Total net sales | $ | 219,927 | $ | 184,079 | $ | 1,101,963 | $ | 921,513 | ||||
Reconciliation between Net (Loss) Income and Adjusted Net (Loss) Income (Unaudited, in 000’s, except for per share amounts) |
|||||||||||||||
| For the Three Months Ended | For the Year Ended | ||||||||||||||
| $'s in 000's | |||||||||||||||
| Net (loss) income | $ | (17,251 | ) | $ | (6,888 | ) | $ | 2,539 | $ | (48,620 | ) | ||||
| Plus: | |||||||||||||||
| Tax (benefit) expense | (1,096 | ) | 845 | (173 | ) | 1,214 | |||||||||
| Impairment and other asset charges(2) | 7,680 | — | 7,680 | 47,264 | |||||||||||
| Acquisition costs(3) | 451 | 273 | 1,164 | 1,464 | |||||||||||
| Stock based compensation expense | 1,409 | 2,459 | 9,468 | 11,363 | |||||||||||
| Integration and business transformation costs(4) | 238 | 228 | 2,316 | 1,171 | |||||||||||
| Litigation expenses | — | 60 | 31 | 3,862 | |||||||||||
| Restructuring(7) | 5,120 | — | 13,605 | — | |||||||||||
| Adjusted Net (loss) income | $ | (3,448 | ) | $ | (3,024 | ) | $ | 36,630 | $ | 17,718 | |||||
| Non-GAAP adjusted EPS | |||||||||||||||
| Basic | $ | (0.12 | ) | $ | (0.10 | ) | $ | 1.26 | $ | 0.61 | |||||
| Diluted | $ | (0.12 | ) | $ | (0.10 | ) | $ | 1.24 | $ | 0.61 | |||||
| Weighted Average shares of Class A common stock outstanding used to compute non-GAAP adjusted EPS | |||||||||||||||
| Basic | 29,193 | 28,967 | 29,135 | 29,159 | |||||||||||
| Diluted | 29,193 | 28,967 | 29,530 | 29,159 | |||||||||||
(1) Depreciation includes
(2) Impairment and other asset charges includes asset charges associated with the Company committing to a plan to sell its foreign subsidiary, Mark & Chappell during the year ended
(3) Acquisition costs include legal, accounting, banking, consulting, diligence, and other costs related to completed and contemplated acquisitions.
(4) Integration and business transformation costs, including personnel costs such as severance and retention bonuses, consulting costs, contract termination costs and IT and ERP implementation costs.
(5) Restructuring consists of variable lease expenses, inventory reserves, lease termination costs, severance, and other miscellaneous costs.
(6) Restructuring charges include inventory reserves and severance costs.
(7) Restructuring charges include accelerated depreciation and amortization, variable lease expenses, inventory reserves, lease termination costs, severance, and other miscellaneous costs.
Reconciliation of Net Cash Provided By Operating Activities to Free Cash Flow (Unaudited, in 000’s) |
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| Year Ended |
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| 2023 | 2022 | |||||||
| Net cash provided by operating activities | $ | 61,887 | $ | 48,024 | ||||
| Purchase of property, plant, and equipment | (9,145 | ) | (11,973 | ) | ||||
| Free Cash Flow | $ | 52,742 | $ | 36,051 | ||||
Calculation of Net Leverage Ratio Under Term Loan B (Unaudited, in 000’s, except for multiples) |
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| $'s in 000's | |||
| Total debt | $ | 445,227 | |
| Total Capital Leases | 1,704 | ||
| Less Cash | (116,369 | ) | |
| Net Debt | 330,562 | ||
| LTM Term Loan B defined EBITDA | 113,188 | ||
| Term Loan B net leverage(1) | 2.9 x | ||
(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.
Source: PetIQ, Inc.