FAIRPORT HARBOR, OH -- Mar 27, 2008 -- OurPet's Company (OTC BB:OPCO): a growing designer, developer, producer and marketer of accessory and consumable pet products, today reported financial results for its fourth quarter and year ended December 31, 2007.
Net revenues for the 2007 fourth quarter decreased 5.2 percent to $2,731,273 from $2,882,167 in the same period a year ago. Gross margin, as a percent of sales for the 2007 fourth quarter, decreased 2.5 percentage points to 26.0 percent from 28.5 percent in the 2006 fourth quarter. For the 2007 fourth quarter the Company reported a net loss of ($103,883), or a loss of less than $0.01 per share, compared to income of $337,221, or $0.02 per diluted share for the same period in 2006. The net loss for the 2007 fourth quarter includes $157,308 of litigation expenses associated with the Company's lawsuit with a competitor, over the OurPet's SmartScoop(TM) litter box. Net income for the 2006 fourth quarter includes an $87,500 gain from an extraordinary item associated with the forgiveness of debt. Income before these items for the 2007 fourth quarter would have been $53,425, compared to $249,721 for the 2006 fourth quarter. Earnings, before interest, taxes, depreciation and amortization (EBITDA), for the 2007 fourth quarter, decreased to $69,699, compared to $473,394 for the 2006 fourth quarter.
Net revenues for 2007 increased 11.9 percent to $10,561,204 from $9,441,697 last year. For 2007, gross margin as a percentage of sales, was 26.7 percent, compared to 27.2 percent in 2006, or a decrease of 0.5 percentage point. Net income for 2007 was $186,886, or $0.01 per diluted share, compared to $560,925, or $0.03 per diluted share for 2006. Net income for 2007 includes litigation expenses, associated with the previously mentioned lawsuit, of $182,381. Net income for 2006 includes the gain from the previously mentioned extraordinary item for the forgiveness of debt of $87,500. Income before these items was $369,267 for 2007, compared to $473,425 for 2006. EBITDA for 2007 was $827,935, compared to $1,089,659 for 2006.
Dr. Steven Tsengas, President and CEO, stated, "The 2007 fourth quarter was very challenging. At the end of 2007 two of our largest customers cut back on their orders as a result of soft market conditions and significant inventory reductions. I am pleased that these drastic cut backs were partially offset by sales to new customers and significantly higher sales to foreign customers. In fact, sales to foreign customers for all of 2007 increased 79.4 percent to $485,646, compared with $270,677 last year. Our sales and marketing efforts are working as we are penetrating new customers and new markets.
"Earnings for both the 2007 fourth quarter and full year were adversely affected by the litigation expenses that we have incurred and will continue to incur in defending the Company's SmartScoop(TM) intellectual property against the patent infringement lawsuits filed against us by a competitor. We believe these lawsuits to be without merit and intend to continue to fight vigorously."
Dr. Tsengas continued, "We feel very positive about the long term potential of our Company and the pet industry. The Company continued to make investments in manufacturing and marketing for our SmartScoop(TM) product line. We recently expanded our Marketing/Sales Department with the addition of a Market Channel/Promotions Manager and a Special Accounts Manager to further promote our quality brands both domestically and overseas. Recent shipments of SmartScoop(TM) and other products have been strong and we look forward to reporting favorable revenue results for the 2008 first quarter, as compared to the same period in 2007. However, until resolution is achieved, litigation expenses will continue to suppress net income."
About OurPet's Company
OurPet's designs, produces and markets a broad line of innovative, high-quality accessory and consumable pet products in the U.S. and overseas. For more information about the Company and its products visit our Websites www.ourpets.com, www.smartscoop.com, www.ecoPureNaturals.com and www.playnsqueak.com.
Certain of the matters set forth in this press release are forward-looking and involve a number of risks and uncertainties. Among the factors that could cause actual results to differ materially are the following: business conditions and growth in the industry; general economic conditions; addition or loss of significant customers; the loss of key personnel; product development; competition; risks of doing business abroad; foreign government regulations; fluctuations in foreign rates; rising costs for raw materials and the unavailability of sources of supply; the timing of orders booked; and the other risks that are described from time to time in OurPet's SEC reports.
--Financial Results Follow--
OURPET'S COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended Year Ended
December 31, December 31,
----------------------- -----------------------
2007 2006 2007 2006
----------- ----------- ----------- -----------
Net revenue $ 2,731,273 $ 2,882,167 $10,561,204 $ 9,441,697
Cost of goods sold 2,020,604 2,060,682 7,743,553 6,874,036
----------- ----------- ----------- -----------
Gross profit on sales 710,669 821,485 2,817,651 2,567,661
Selling, general and
administrative expenses 614,128 544,630 2,283,585 1,934,482
----------- ----------- ----------- -----------
Income from operations 96,541 276,855 534,066 633,179
Other income and
expense, net 2,871 15,539 4,941 7,643
Interest expense (45,987) (42,673) (169,740) (167,397)
----------- ----------- ----------- -----------
Income before litigation
expense and
extraordinary item 53,425 249,721 369,267 473,425
Litigation expense (157,308) - (182,381) -
----------- ----------- ----------- -----------
Income before
extraordinary item (103,883) 249,721 186,886 473,425
Extraordinary item - debt
forgiveness - 87,500 - 87,500
----------- ----------- ----------- -----------
Net income $ (103,883)$ 337,221 $ 186,886 $ 560,925
=========== =========== =========== ===========
Basic and diluted earnings
per common share after
dividend requirements for
Preferred Stock:
Income before
extraordinary item $ - $ 0.02 $ 0.01 $ 0.03
Extraordinary item - - - -
----------- ----------- ----------- -----------
Net Income $ - $ 0.02 $ 0.01 $ 0.03
=========== =========== =========== ===========
Weighted average number of
common and equivalent
shares outstanding used
to calculate basic and
diluted earnings
per share 17,234,190 15,837,788 17,680,760 15,522,099
OURPET'S COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31, December 31,
2007 2006
------------ ------------
ASSETS
Cash and equivalents $ 28,843 $ 30,400
Receivables, net 1,239,410 1,160,832
Inventories 3,395,512 2,848,980
Prepaid expenses 91,069 48,231
------------ ------------
Total current assets 4,754,834 4,088,443
Property and equipment, net 2,309,529 2,058,201
Other 337,967 329,735
------------ ------------
Total assets $ 7,402,330 $ 6,476,379
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Short-term borrowings and current maturities
of long-term debt $ 2,032,857 $ 1,548,911
Accounts payable 1,170,225 1,020,645
Accrued expenses 122,813 164,973
------------ ------------
Total current liabilities 3,325,895 2,734,529
Long-term debt 250,655 211,132
Stockholders' Equity 3,825,780 3,530,718
------------ ------------
Total liabilities and
stockholders' equity $ 7,402,330 $ 6,476,379
============ ============