PetIQ(US:PETQ)2021-02-27 02:53Financial Performance - Consolidated net sales increased by approximately $70.7 million, or 10%, to $780.1 million for the year ended December 31, 2020, compared to $709.4 million for the year ended December 31, 2019 [205]. - The Products segment net sales were $725.7 million, representing 93.0% of total net sales, while Service revenue decreased to $54.3 million, accounting for 7.0% of total net sales [204]. - Gross profit increased to $135.2 million, with a gross margin of 17.3% for 2020, compared to 15.1% in 2019 [204]. - Net loss for the year ended December 31, 2020, was $81.0 million, compared to a net loss of $14.3 million in 2019, reflecting a significant increase in losses [204]. - EBITDA for the year ended December 31, 2020, was $22.4 million, an increase from $12.0 million in 2019, while Adjusted EBITDA rose to $67.8 million from $60.7 million [236]. - Comprehensive loss attributable to PetIQ was $77.1 million for 2020, compared to a loss of $11.2 million in 2019, highlighting the challenges faced during the year [309]. Expenses and Losses - General and administrative expenses as a percentage of net sales increased to 17.7% in 2020 from 14.5% in 2019, primarily due to integration costs and growth in corporate services [197]. - The operating loss for 2020 was $3.2 million, consistent with the previous year's loss of $3.1 million [204]. - Consolidated general and administrative expenses increased approximately $35.2 million, or 34%, to $138.4 million for the year ended December 31, 2020, compared to $103.1 million for the year ended December 31, 2019 [211]. - Interest expense, net, increased $11.8 million, to $26.3 million for the year ended December 31, 2020, compared to $14.5 million for the year ended December 31, 2019 [216]. - Pre-tax net loss increased $11.2 million to a pre-tax net loss of $28.8 million for the year ended December 31, 2020, compared to a pre-tax net loss of $17.6 million for the year ended December 31, 2019 [217]. Cash Flow and Investments - Cash and cash equivalents as of December 31, 2020, were $33.5 million, up from $27.3 million as of December 31, 2019 [238]. - Net cash used in operating activities was $4.6 million for the year ended December 31, 2020, compared to $20.8 million provided in 2019 [241]. - Net cash used in investing activities decreased to $118.0 million for the year ended December 31, 2020, from $195.0 million in 2019 [245]. - Net cash provided by financing activities was $128.8 million for the year ended December 31, 2020, compared to $135.1 million in 2019 [246]. Segment Performance - The Services segment experienced declining sales due to COVID-19 related closures, impacting overall revenue growth [207]. - Product sales increased approximately $108.6 million, or 18%, to $725.7 million for the year ended December 31, 2020, compared to $617.1 million for the year ended December 31, 2019 [208]. - Services segment Adjusted EBITDA decreased approximately $16.7 million, or 83.1%, to $3.4 million for the year ended December 31, 2020, compared to $20.0 million for the year ended December 31, 2019 [223]. Debt and Obligations - Total contractual obligations as of December 31, 2020 amounted to $621.8 million, with long-term debt comprising $419.8 million [268]. - The Company had variable rate debt of approximately $232.3 million under its Revolver and Term Loan as of December 31, 2020 [285]. - The Company entered into a guarantee note and Contingent Notes related to the VIP Acquisition, with a collective balance of $27.5 million [266]. - As of December 31, 2020, the company had $15.0 million outstanding under a revolving credit facility with a weighted average interest rate of 2.3% [257]. Assets and Capital - Total assets increased to $771.6 million in 2020, up from $672.7 million in 2019, driven by growth in current and non-current assets [305]. - Long-term debt, less current installments, rose to $356.0 million in 2020, compared to $251.4 million in 2019, indicating increased leverage [305]. - The company’s additional paid-in capital increased to $356.4 million in 2020, up from $300.1 million in 2019, reflecting ongoing capital raising efforts [305]. Tax and Deferred Assets - The company had $53.1 million in deferred tax assets associated with exchange transactions as of December 31, 2020 [297]. - The Company has recorded a valuation allowance against deferred tax assets, believing it is more likely than not that the benefit from these assets will not be realized [282]. - Income tax expense totaled (181.3%) and 18.8% of pretax earnings for the years ended December 31, 2020 and 2019, respectively [219]. Other Financial Metrics - Research and development costs amounted to $2.3 million, $1.3 million, and $0.2 million for the years ended December 31, 2020, 2019, and 2018, respectively [363]. - Advertising costs were $10.1 million, $4.5 million, and $2.9 million for the years ended December 31, 2020, 2019, and 2018, respectively [363]. - Stock options granted to executives and other employees are valued using the Black-Scholes option pricing model [366].