PetIQ, Inc. Reports Fourth Quarter and Full Year 2020 Financial Results
PetIQ reported a 4Q 2020 net sales of $164.2 million, a 6.4% increase year-over-year, driven by a 7.5% rise in the Products segment, totaling $145.1 million. Full year 2020 net sales reached $780.1 million, a 10% increase. However, the Services segment faced challenges, with revenues declining by 41.1% to $54.3 million. Despite a net loss of $81 million driven by acquisition expenses, adjusted EBITDA rose 11.7% to $67.8 million. The company expects to continue growth in 2021, anticipating new wellness centers and increased sales.
- 4Q 2020 net sales increased 6.4% to $164.2 million, exceeding expectations by approximately $20 million.
- Product segment net sales grew 7.5%, contributing $145.1 million.
- Full year 2020 net sales rose 10% to $780.1 million.
- Adjusted EBITDA increased 11.7% to $67.8 million for the year.
- Company has total liquidity of approximately $128.5 million.
- Net loss for 2020 was $81 million, significantly higher than the previous year due to acquisition-related costs.
- Services segment revenues decreased by 41.1% to $54.3 million for the year.
- Adjusted net income fell to $16.6 million from $31.0 million.
Reports Fourth Quarter 2020 Net Sales of
EAGLE, Idaho, Feb. 25, 2021 (GLOBE NEWSWIRE) -- PetIQ, Inc. (“PetIQ” or the “Company”) (Nasdaq: PETQ), a leading pet medication and wellness company, today reported financial results for the three and twelve months ended December 31, 2020.
“We’re pleased with our strong finish to 2020. Our financial results were better than we expected for the fourth quarter, driven by robust growth in our Products segment, solid consolidated gross margin expansion and an improvement in our Services segment from the third quarter of 2020, even as we continued to experience clinic and wellness center temporary closures due to absenteeism from COVID-19 illnesses,” commented Cord Christensen, PetIQ’s Chairman & Chief Executive Officer. “The financial strength that our Products segment provides to our broader business is an important component of the resilient nature of PetIQ. We believe the three strategic acquisitions we have completed in the last three years have been highly complementary and position us well to further extend our ability to connect with more pet parents and their pets. Looking ahead, we’ve had a strong start to 2021 and expect our diversified business model will enable us to emerge from this period of disruption in an even stronger position with broader capabilities to bring convenient and affordable pet health and wellness products and services to pet parents in the formats that best fit their lives.”
Fourth Quarter 2020 Highlights Compared to Prior Year Period
- Net sales of
$164.2 million compared to$154.3 million , an increase of6.4% - Product segment net sales of
$145.1 million compared to$134.9 million , an increase of7.5% - Product adjusted EBITDA increased
44.8% to$24.8 million , representing an adjusted EBITDA margin of17.1% , an increase of 440 basis points - Services Segment net revenues of
$19.2 million compared to$19.4 million , a decrease of1.5% , reflecting a continuation of absenteeism related to COVID-19 illness, resulting in temporary clinic closures of12% to16% week-to-week - Service segment net revenues increased nearly
60% compared to the third quarter of 2020 - 19 new wellness center openings in the fourth quarter of 2020, in-line with the Company’s stated objective of 126 wellness centers in operation at the end of 2020
- Net loss of
$11.9 million compared to net loss of$13.8 million , primarily due to$5.1 million in additional interest, depreciation, and amortization expense related to the Capstar® acquisition - Adjusted net loss of
$2.5 million compared to adjusted net loss of$0.03 million , driven by the previously mentioned interest and depreciation and amortization - Adjusted EBITDA of
$13.0 million compared to$9.7 million , an increase of33.9%
Full Year 2020 Highlights Compared to Prior Year
- Net sales of
$780.1 million compared to$709.4 million , an increase of10.0% - Product segment net sales of
$725.7 million , an increase of17.6% - Product adjusted EBITDA increased
59.4% to$117.2 million , representing an adjusted EBITDA margin of16.1% , an increase of 420 basis points - Services Segment net revenues of
$54.3 million compared to$92.3 million , a decrease of41.1% - Net loss of
$81.0 million compared to a net loss of$14.3 million , primarily due to incremental expenses related to the Capstar® acquisition and a$52.2 million non-cash tax expense, driven by a valuation allowance of the Company’s deferred tax assets - Adjusted net income of
$16.6 million compared to adjusted net income of$31.0 million - Adjusted EBITDA of
$67.8 million compared to$60.7 million , an increase of11.7% - As of December 31, 2020, the Company has total liquidity of approximately
$128.5 million , and an additional$15 million available via an accordion feature of the credit agreement for total liquidity of$143.5 million - Completed the acquisition of the Capstar® portfolio of products on July 31, 2020 which the Company continues to expect to add greater than
$20 million of incremental EBITDA contribution in full year 2021 - All of the Company’s community clinics and wellness centers have re-opened in-line with the Company’s stated objective and finished 2020 with 126 wellness centers in operation
Fourth Quarter 2020 Financial Results
Net sales increased
Fourth quarter 2020 gross profit was
Net loss was
Fourth quarter adjusted EBITDA of
Adjusted gross profit, adjusted gross margin, adjusted G&A, adjusted net income, adjusted net loss, 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 in light of changes in the Company’s operations, including the increase of manufacturing operations as a result of the Perrigo Animal Health Acquisition and the Capstar® 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 fourth quarter of 2020, Product segment net sales increased
Full year 2020 Product segment net sales increased
Services:
For the fourth quarter of 2020, Services segment net revenues were
Full year 2020 Services segment net revenues and adjusted EBITDA were
Cash Flow and Balance Sheet
As of December 31, 2020, the Company had cash and cash equivalents of
Working capital increased to
Outlook
The Company expects to open 130 to 170 new wellness centers in 2021. While the Company’s outlook remains suspended due to the uncertainty from potential COVID-19 related impacts to its business, consistent with management commentary on its third quarter 2020 earnings conference call, it continues to maintain an internal budget of approximately
The Company continues to expect full year 2021 incremental EBITDA contribution from Capstar® of greater than
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 today at 4:30 p.m. ET. To participate on the live call listeners in North America may dial 800-916-9049 and international listeners may dial 415-226-5355.
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 March 11, 2021. North American listeners may dial 844-512-2921 and international listeners may dial 412-317-6671; the passcode is 21991574.
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, 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.
Contact: Investor.relations@petiq.com or 208.513.1513
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 Quarterly Report on Form 10-Q for the quarter ended June 30, 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 net loss (income), adjusted gross profit, adjusted gross margin, adjusted G&A, adjusted EBITDA, and adjusted EBITDA margin.
Adjusted net income (loss) consists of net loss adjusted for tax expense, acquisition expenses, COVID-19 related costs, integration costs and costs of discontinued clinics, new clinic launch expense, SKU rationalization expenses, fair value adjustment of contingent note, purchase accounting adjustments to inventory, non same-store revenue, non same-store costs, litigation costs, COVID-19 related costs, and stock-based compensation expense. Adjusted net income (loss) 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, purchase accounting adjustments to inventory, and SKU rationalization costs. Adjusted gross profit is utilized by management to evaluate the effectiveness of our business strategies.
Adjusted G&A consists of G&A adjusted for acquisition expense, stock compensation expense, non-same store G&A, integrations expense, clinic launch expense, litigation expense and COVID-19 related losses.
EBITDA and Adjusted EBITDA are non-GAAP financial measures. EBITDA represents net income (loss) 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 (loss), adjusted gross profit, adjusted gross margin, adjusted general and administrative expenses (Adjusted G&A), 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 (loss) income, adjusted gross profit, adjusted G&A, 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 (loss) income, adjusted gross profit, adjusted G&A, 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 (loss) 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 (loss) 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 (loss) 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.
PetIQ, Inc.
Condensed Consolidated Balance Sheets
(Unaudited, in 000’s except for per share amounts)
| December 31, 2020 | December 31, 2019 | ||||||||
| Current assets | |||||||||
| Cash and cash equivalents | $ | 33,456 | $ | 27,272 | |||||
| Accounts receivable, net | 102,755 | 71,377 | |||||||
| Inventories | 97,773 | 79,703 | |||||||
| Other current assets | 8,312 | 7,071 | |||||||
| Total current assets | 242,296 | 185,423 | |||||||
| Property, plant and equipment, net | 63,146 | 52,525 | |||||||
| Operating lease right of use assets | 20,122 | 20,785 | |||||||
| Deferred tax assets | — | 59,780 | |||||||
| Other non-current assets | 1,870 | 3,214 | |||||||
| Intangible assets, net | 213,000 | 119,956 | |||||||
| Goodwill | 231,158 | 231,045 | |||||||
| Total assets | $ | 771,592 | $ | 672,728 | |||||
| Liabilities and equity | |||||||||
| Current liabilities | |||||||||
| Accounts payable | $ | 68,131 | $ | 51,538 | |||||
| Accrued wages payable | 10,540 | 9,082 | |||||||
| Accrued interest payable | 903 | 83 | |||||||
| Other accrued expenses | 8,815 | 3,871 | |||||||
| Current portion of operating leases | 4,915 | 4,619 | |||||||
| Current portion of long-term debt and finance leases | 7,794 | 3,821 | |||||||
| Total current liabilities | 101,098 | 73,014 | |||||||
| Operating leases, less current installments | 15,789 | 16,580 | |||||||
| Long-term debt, less current installments | 355,948 | 251,376 | |||||||
| Finance leases, less current installments | 3,338 | 3,331 | |||||||
| Other non-current liabilities | 1,397 | 117 | |||||||
| Total non-current liabilities | 376,472 | 271,404 | |||||||
| Commitments and contingencies (Note 13) | |||||||||
| Equity | |||||||||
| Additional paid-in capital | 356,442 | 300,120 | |||||||
| Class A common stock, par value | 26 | 23 | |||||||
| Class B common stock, par value | 3 | 5 | |||||||
| Accumulated deficit | (93,377 | ) | (15,903 | ) | |||||
| Accumulated other comprehensive loss | (686 | ) | (1,131 | ) | |||||
| Total stockholders' equity | 262,408 | 283,114 | |||||||
| Non-controlling interest | 31,614 | 45,196 | |||||||
| Total equity | 294,022 | 328,310 | |||||||
| Total liabilities and equity | $ | 771,592 | $ | 672,728 | |||||
PetIQ, Inc.
Condensed Consolidated Statements of Operations
(Unaudited, in 000’s, except for per share amounts)
| For the Three Months Ended | For the Year Ended | |||||||||||||||
| December 31, 2020 | December 31, 2019 | December 31, 2020 | December 31, 2019 | |||||||||||||
| Product sales | $ | 145,055 | $ | 134,894 | $ | 725,705 | $ | 617,118 | ||||||||
| Services revenue | 19,153 | 19,442 | 54,346 | 92,313 | ||||||||||||
| Total net sales | 164,208 | 154,336 | 780,051 | 709,431 | ||||||||||||
| Cost of products sold | 115,306 | 113,283 | 584,401 | 530,031 | ||||||||||||
| Cost of services | 20,320 | 20,591 | 60,462 | 72,017 | ||||||||||||
| Total cost of sales | 135,626 | 133,874 | 644,863 | 602,048 | ||||||||||||
| Gross profit | 28,582 | 20,462 | 135,188 | 107,383 | ||||||||||||
| Operating expenses | ||||||||||||||||
| General and administrative expenses | 32,631 | 28,867 | 138,375 | 103,200 | ||||||||||||
| Contingent note revaluations gain | — | 4,230 | — | 7,320 | ||||||||||||
| Operating loss | (4,049 | ) | (12,635 | ) | (3,187 | ) | (3,137 | ) | ||||||||
| Interest expense, net | (7,799 | ) | (4,574 | ) | (26,299 | ) | (14,495 | ) | ||||||||
| Foreign currency loss, net | 235 | (78 | ) | 109 | (151 | ) | ||||||||||
| Other income, net | (131 | ) | 163 | 571 | 172 | |||||||||||
| Total other expense, net | (7,695 | ) | (4,489 | ) | (25,619 | ) | (14,474 | ) | ||||||||
| Pretax net loss | (11,744 | ) | (17,124 | ) | (28,806 | ) | (17,611 | ) | ||||||||
| Income tax (expense) benefit | (156 | ) | 3,386 | (52,216 | ) | 3,309 | ||||||||||
| Net loss | (11,900 | ) | (13,738 | ) | (81,022 | ) | (14,302 | ) | ||||||||
| Net loss attributable to non-controlling interest | (1,481 | ) | (2,761 | ) | (3,548 | ) | (2,849 | ) | ||||||||
| Net loss attributable to PetIQ, Inc. | $ | (10,419 | ) | $ | (10,977 | ) | $ | (77,474 | ) | $ | (11,453 | ) | ||||
| Net (loss) income per share attributable to PetIQ, Inc. Class A common stock | ||||||||||||||||
| Basic | $ | (0.41 | ) | $ | (0.47 | ) | $ | (3.15 | ) | $ | (0.51 | ) | ||||
| Diluted | $ | (0.41 | ) | $ | (0.47 | ) | $ | (3.15 | ) | $ | (0.51 | ) | ||||
| Weighted Average shares of Class A common stock outstanding | ||||||||||||||||
| Basic | 25,413 | 23,436 | 24,629 | 22,652 | ||||||||||||
| Diluted | 25,413 | 23,436 | 24,629 | 22,652 | ||||||||||||
PetIQ, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited, in 000’s)
| | For the Year Ended December 31, | ||||||||
| 2020 | 2019 | ||||||||
| Cash flows from operating activities | |||||||||
| Net (loss) income | $ | (81,022 | ) | $ | (14,302 | ) | |||
| Adjustments to reconcile net loss to net cash provided by (used in) operating activities | |||||||||
| Depreciation and amortization of intangible assets and loan fees | 30,975 | 16,509 | |||||||
| Termination of supply agreement | 7,801 | — | |||||||
| Gain on disposition of property, plant, and equipment | (238 | ) | (189 | ) | |||||
| Stock based compensation expense | 9,170 | 7,355 | |||||||
| Deferred tax adjustment | 51,511 | (3,458 | ) | ||||||
| Contingent note revaluation | — | 7,320 | |||||||
| Other non-cash activity | 164 | 405 | |||||||
| Changes in assets and liabilities | |||||||||
| Accounts receivable | (31,652 | ) | (14,123 | ) | |||||
| Inventories | (17,846 | ) | 30,448 | ||||||
| Other assets | 556 | (1,619 | ) | ||||||
| Accounts payable | 17,435 | (7,595 | ) | ||||||
| Accrued wages payable | 1,424 | 2,800 | |||||||
| Other accrued expenses | 7,121 | (2,718 | ) | ||||||
| Net cash (used in) provided by operating activities | (4,601 | ) | 20,833 | ||||||
| Cash flows from investing activities | |||||||||
| Proceeds from disposition of property, plant, and equipment | 442 | 340 | |||||||
| Purchase of property, plant, and equipment | (22,392 | ) | (10,276 | ) | |||||
| Purchase of Capstar and related intangibles | (96,072 | ) | — | ||||||
| Business acquisitions (net of cash acquired) | — | (185,090 | ) | ||||||
| Net cash used in investing activities | (118,022 | ) | (195,026 | ) | |||||
| 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 | 837,675 | 818,387 | |||||||
| Principal payments on long-term debt | (838,073 | ) | (676,509 | ) | |||||
| Payment of financing fees on Convertible Notes | (5,884 | ) | — | ||||||
| Tax distributions to LLC Owners | (47 | ) | (1,686 | ) | |||||
| Principal payments on finance lease obligations | (1,965 | ) | (1,547 | ) | |||||
| Payment of deferred financing fees and debt discount | (550 | ) | (5,790 | ) | |||||
| Tax withholding payments on Restricted Stock Units | (595 | ) | (114 | ) | |||||
| Exercise of options to purchase class A common stock | 9,274 | 2,318 | |||||||
| Net cash provided by financing activities | 128,764 | 135,059 | |||||||
| Net change in cash and cash equivalents | 6,141 | (39,134 | ) | ||||||
| Effect of exchange rate changes on cash and cash equivalents | 43 | 46 | |||||||
| Cash and cash equivalents, beginning of period | 27,272 | 66,360 | |||||||
| Cash and cash equivalents, end of period | $ | 33,456 | $ | 27,272 | |||||
PetIQ, Inc.
Summary Segment Results
(Unaudited, in 000’s)
| For the three months ended | For the year ended | ||||||||||||||
| $'s in 000's | December 31, 2020 | December 31, 2019 | December 31, 2020 | December 31, 2019 | |||||||||||
| Services segment sales: | |||||||||||||||
| Same-store sales | $ | 16,285 | $ | 17,608 | $ | 45,359 | $ | 84,225 | |||||||
| Non same-store sales | 2,868 | 1,834 | 8,987 | 8,088 | |||||||||||
| Net services segment sales | 19,153 | 19,442 | 54,346 | 92,313 | |||||||||||
| Products segment sales | 145,055 | 134,894 | 725,705 | 617,118 | |||||||||||
| Total net sales | 164,208 | 154,336 | 780,051 | 709,431 | |||||||||||
| Adjusted EBITDA | |||||||||||||||
| Products | 24,768 | 17,093 | 117,216 | 73,537 | |||||||||||
| Services | 509 | 1,949 | 3,387 | 20,045 | |||||||||||
| Unallocated Corporate | (12,256 | ) | (9,315 | ) | (52,811 | ) | (32,907 | ) | |||||||
| Total Adjusted EBITDA | $ | 13,021 | $ | 9,726 | $ | 67,792 | $ | 60,675 | |||||||
PetIQ, Inc.
Reconciliation between gross profit and adjusted gross profit
(Unaudited, in 000’s)
| For the three months ended | For the year ended | ||||||||||||||
| December 31, 2020 | December 31, 2019 | December 31, 2020 | December 31, 2019 | ||||||||||||
| Gross profit | $ | 28,582 | $ | 20,462 | $ | 135,188 | $ | 107,383 | |||||||
| Plus: | |||||||||||||||
| Purchase accounting adjustment to inventory | — | 2,402 | — | 4,805 | |||||||||||
| Non same-store gross loss | 3,535 | 3,973 | 11,195 | 8,802 | |||||||||||
| COVID-19 related costs | 225 | — | 4,403 | — | |||||||||||
| SKU Rationalization | — | — | — | 6,482 | |||||||||||
| Adjusted gross profit | $ | 32,342 | $ | 26,837 | $ | 150,786 | $ | 127,472 | |||||||
| Adjusted gross margin | | 17.6% | 19.6% | 18.2% | |||||||||||
PetIQ, Inc.
Reconciliation between G&A and adjusted G&A
(Unaudited, in 000’s)
| For the three months ended | For the year ended | ||||||||||
| December 31, 2020 | December 31, 2019 | December 31, 2020 | December 31, 2019 | ||||||||
| General and Administrative expenses | $ | 32,631 | $ | 28,867 | $ | 138,375 | $ | 103,200 | |||
| Less: | |||||||||||
| Acquisition costs | 805 | 722 | 2,620 | 6,147 | |||||||
| Stock based compensation expense | 2,621 | 2,608 | 9,170 | 7,355 | |||||||
| Integration costs and costs of discontinued clinics(5) | 165 | 1,480 | 9,776 | 3,788 | |||||||
| Non same-store general and administrative expenses | 377 | 1,057 | 2,074 | 2,663 | |||||||
| Clinic launch expenses | 1,039 | 95 | 3,085 | 767 | |||||||
| Litigation expenses | 283 | 529 | 1,006 | 529 | |||||||
| COVID-19 related costs(6) | 218 | — | 6,476 | — | |||||||
| Adjusted G&A | $ | 27,123 | $ | 22,376 | $ | 104,168 | $ | 81,951 | |||
PetIQ, Inc.
Reconciliation between Net (Loss) Income and Adjusted EBITDA
(Unaudited, in 000’s)
| For the three months ended | For the year ended | ||||||||||||||
| December 31, 2020 | December 31, 2019 | December 31, 2020 | December 31, 2019 | ||||||||||||
| Net loss | $ | (11,900 | ) | $ | (13,738 | ) | $ | (81,022 | ) | $ | (14,302 | ) | |||
| Plus: | |||||||||||||||
| Tax expense (benefit) | 156 | (3,386 | ) | 52,216 | (3,309 | ) | |||||||||
| Depreciation | 3,196 | 3,551 | 12,082 | 9,139 | |||||||||||
| Amortization | 4,502 | 1,630 | 12,815 | 5,994 | |||||||||||
| Interest | 7,799 | 4,574 | 26,299 | 14,495 | |||||||||||
| EBITDA | $ | 3,753 | $ | (7,369 | ) | $ | 22,390 | $ | 12,017 | ||||||
| Acquisition costs(1) | 805 | 722 | 2,620 | 6,147 | |||||||||||
| SKU Rationalization(2) | — | — | — | 6,482 | |||||||||||
| Stock based compensation expense | 2,621 | 2,608 | 9,170 | 7,355 | |||||||||||
| Purchase accounting adjustment to inventory | — | 2,402 | — | 4,805 | |||||||||||
| Non same-store revenue(3) | (2,868 | ) | (1,834 | ) | (8,987 | ) | (8,088 | ) | |||||||
| Non same-store costs(3) | 6,780 | 6,863 | 22,256 | 19,553 | |||||||||||
| Fair value adjustment of contingent note(4) | — | 4,230 | — | 7,320 | |||||||||||
| Integration costs and costs of discontinued clinics(5) | 165 | 1,480 | 9,776 | 3,788 | |||||||||||
| Clinic launch expenses(6) | 1,039 | 95 | 3,085 | 767 | |||||||||||
| Litigation expenses | 283 | 529 | 1,006 | 529 | |||||||||||
| COVID-19 related costs(7) | 443 | — | 6,476 | — | |||||||||||
| Adjusted EBITDA | $ | 13,021 | $ | 9,726 | $ | 67,792 | $ | 60,675 | |||||||
| Adjusted gross margin | 7.9% | 6.3% | 8.7% | 8.6% | |||||||||||
(1) Acquisition costs include legal, accounting, banking, consulting, diligence, and other out-of-pocket costs related to completed and contemplated acquisitions.
(2) SKU rationalization relates to the disposal of or reserve to estimated net realizable value for inventory that will either no longer be sold, or will be de-emphasized, as the Company aligns brands between Legacy PetIQ brands and brands acquired as part of the Perrigo Animal Health Acquisition. All costs are included in the Products segment gross margin.
(3) 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.
(4) Fair value adjustment on the contingent note represents the non cash adjustment to mark the 2019 Contingent Note to fair value.
(5) 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.
(6) 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.
(7) Costs related to maintaining service segment infrastructure, staffing, and overhead related to 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 and adjusted net (loss) income
(Unaudited, in 000’s)
| Three Months Ended | Year Ended | ||||||||||||||
| December 31, 2020 | December 31, 2019 | December 31, 2020 | December 31, 2019 | ||||||||||||
| Net loss | $ | (11,900 | ) | $ | (13,738 | ) | $ | (81,022 | ) | $ | (14,302 | ) | |||
| Plus: | |||||||||||||||
| Tax expense (benefit) | 156 | (3,386 | ) | 52,216 | (3,309 | ) | |||||||||
| Acquisition costs(1) | 805 | 722 | 2,620 | 6,147 | |||||||||||
| Integration costs and costs of discontinued clinics(2) | 165 | 1,480 | 9,776 | 3,788 | |||||||||||
| SKU rationalization(3) | — | — | — | 6,482 | |||||||||||
| Purchase accounting adjustment to inventory | — | 2,402 | — | 4,805 | |||||||||||
| Stock based compensation expense | 2,621 | 2,608 | 9,170 | 7,355 | |||||||||||
| Fair value adjustment of contingent note(4) | — | 4,230 | — | 7,320 | |||||||||||
| Non same-store revenue(5) | (2,868 | ) | (1,834 | ) | (8,987 | ) | (8,088 | ) | |||||||
| Non same-store costs(5) | 6,780 | 6,863 | 22,256 | 19,553 | |||||||||||
| Clinic launch expenses(6) | 1,039 | 95 | 3,085 | 767 | |||||||||||
| Litigation expenses | 283 | 529 | 1,006 | 529 | |||||||||||
| COVID-19 related costs(7) | 443 | — | 6,476 | — | |||||||||||
| Adjusted Net (loss) income | $ | (2,476 | ) | $ | (29 | ) | $ | 16,596 | $ | 31,047 | |||||
(1) Acquisition costs include legal, accounting, banking, consulting, diligence, and other out-of-pocket costs related to completed and contemplated acquisitions
(2) 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.
(3) SKU rationalization relates to the disposal of or reserve to estimated net realizable value for inventory that will either no longer be sold, or will be de-emphasized, as the Company aligns brands between Legacy PetIQ brands and brands acquired as part of the Perrigo Animal Health Acquisition. All costs are included in the Products segment gross margin.
(4) Fair value adjustment on the contingent note represents the non cash adjustment to mark the 2019 Contingent Note to fair value.
(5) 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.
(6) 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.
(7) 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.
FAQ
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