PetIQ(US:PETQ)2023-08-08 22:06Financial Performance - For the three months ended June 30, 2023, total net sales increased to $314.5 million, up 25% from $252.0 million in the same period of 2022[17]. - Gross profit for the six months ended June 30, 2023, was $136.1 million, representing a 14% increase compared to $119.6 million for the same period in 2022[17]. - Net income attributable to PetIQ, Inc. for the three months ended June 30, 2023, was $9.5 million, compared to $4.6 million for the same period in 2022, reflecting a 104% increase[17]. - Operating income for the three months ended June 30, 2023, was $18.7 million, up from $11.4 million in the same period of 2022, marking a 64% increase[17]. - The total net income for the six months ended June 30, 2023, was $19,334,000, an increase from $7,838,000 in the same period of 2022[86]. - For the three months ended June 30, 2023, net sales for the Products segment were $278,167,000, an increase of 26.9% from $219,014,000 in the same period of 2022[82]. - For the six months ended June 30, 2023, net sales for the Services segment reached $67,858,000, up from $60,945,000 in the same period of 2022, reflecting an increase of 11.8%[83]. - The total Segment Adjusted EBITDA for the three months ended June 30, 2023, was $34,790,000, compared to $27,582,000 for the same period in 2022, representing a growth of 26.1%[86]. - Consolidated net sales increased by $62.5 million, or 24.8%, to $314.5 million for the three months ended June 30, 2023, compared to $252.0 million for the same period in 2022[101]. - Product sales rose by $59.2 million, or 27.0%, to $278.2 million for the three months ended June 30, 2023, driven by strong consumer demand and the acquisition of R&R[102]. - Services revenue increased by $3.4 million, or 10.2%, to $36.4 million for the three months ended June 30, 2023, with same-store sales up by $5.3 million, or 19.0%[103]. Cash Flow and Liquidity - Cash and cash equivalents decreased to $78.4 million as of June 30, 2023, down from $101.3 million at the end of 2022[15]. - The company reported a net cash provided by operating activities of $14.4 million for the six months ended June 30, 2023, compared to a net cash used of $65.4 million in the same period of 2022[24]. - The company had working capital of $230.7 million as of June 30, 2023, compared to $220.6 million as of December 31, 2022[131]. - Cash provided by operating activities was $14.4 million for the six months ended June 30, 2023, a significant improvement from $65.4 million used in the same period of 2022[134]. - The company anticipates meeting its operating, investing, and financing needs for at least the next 12 months through operating cash flow and available credit[133]. Debt and Liabilities - Total current liabilities increased to $191.7 million as of June 30, 2023, from $149.5 million at the end of 2022, indicating higher short-term obligations[15]. - The company’s long-term debt, less current installments, was $440.6 million as of June 30, 2023, slightly down from $443.3 million at the end of 2022[15]. - The interest rate on the Senior Secured Term Loan B was 9.46% as of June 30, 2023, following an amendment to replace the interest rate benchmark from LIBOR to SOFR[47][48]. - The company had variable rate debt of approximately $305.1 million as of June 30, 2023, with a potential interest expense increase of $0.7 million for a 1% rate hike[138]. Acquisitions and Investments - The company completed a business acquisition for $27.6 million during the six months ended June 30, 2023[24]. - The Company completed the acquisition of Rocco & Roxie Supply Co, LLC for $26.5 million, expanding its product portfolio to include premium dog supplements and jerky treats[41]. - The total purchase price allocation for the R&R Acquisition was $27.6 million, with $20.8 million allocated to goodwill, of which approximately $19.5 million is not tax deductible[42][43]. - Net cash used in investing activities was $31.8 million for the six months ended June 30, 2023, primarily due to the acquisition of R&R[135]. Equity and Stock Compensation - The total equity as of June 30, 2023, was $235.603 million, up from $211.793 million at the beginning of the year, reflecting an increase of about 11.2%[30]. - The company reported stock-based compensation expense of $2.743 million for the three months ended June 30, 2023[30]. - Stock-based compensation expense for the three months ended June 30, 2023, totaled $0.4 million, down from $0.9 million in the same period of 2022[65]. - Total unrecognized compensation cost related to unvested stock options as of June 30, 2023, was $2.6 million, expected to be recognized over a weighted-average period of 1.5 years[65]. - As of June 30, 2023, total unrecognized compensation cost related to unvested RSUs was $24.9 million, expected to vest over a weighted average period of 3.2 years[68]. - The company had 1,604 thousand nonvested RSUs outstanding at June 30, 2023, with a grant date fair value of $14.94[71]. Taxation - The effective tax rate from continuing operations was 2.0% for the three months ended June 30, 2023, compared to 11.4% for the same period in 2022[55]. - The effective tax rate was 3.2% for the six months ended June 30, 2023, compared to 8.5% for the same period in 2022, with a tax expense of $0.6 million[121]. Operational Highlights - The company operates over 60,000 points of distribution across retail and e-commerce channels, enhancing its market reach[35]. - PetIQ's national service platform operates in over 2,600 retail partner locations across 41 states, providing veterinary wellness services[35]. - The Products segment includes manufacturing and distribution, while the Services segment encompasses veterinary and wellness services[36]. - The company has not reported any significant changes to its accounting policies that would materially impact its financial statements during the reporting period[40]. - The financial results for the interim periods are not necessarily indicative of the results that may be expected for the full year[38]. - Maintenance capital expenditures have typically been less than 1.0% of net sales, with potential for additional expenditures to support growth[131]. - The company is exploring opportunities to optimize its capital structure as part of its long-term liquidity strategy[133].