• PetIQ, Inc. Reports Record Fourth Quarter and Full Year 2021 Financial Results

    ソース: Nasdaq GlobeNewswire / 01 3 2022 16:05:01   America/New_York

    Reports Fourth Quarter Net Sales of $196.6 Million and Full Year Net Sales of $932.5 Million

    Company Provides First Quarter 2022 and Full Year 2022 Outlook

    EAGLE, Idaho, March 01, 2022 (GLOBE NEWSWIRE) -- PetIQ, Inc. (“PetIQ” or the “Company”) (Nasdaq: PETQ), a leading pet medication and wellness company, today reported financial results for the fourth quarter and full year ended December 31, 2021.

    Cord Christensen, PetIQ’s Chairman & CEO commented, “We are very pleased with our strong finish to 2021. Our record fourth quarter was better than we expected driven by growth in the Products segment as we benefited from strong flea and tick and health and wellness sales.”

    Christensen continued, “We are excited to launch two new products in the first half of 2022 that we expect to help fuel continued momentum in our branded Products segment. We also are introducing a direct-to-consumer initiative in the second half of 2022 as we continue to provide smarter options for pet parents to help enrich their pets’ lives through convenient and affordable access to veterinarian products and services. We believe our team’s strong operational execution positions us well for continued growth and increasing contribution from our own pet health and wellness brands at an attractive margin in 2022.”

    Fourth Quarter 2021 Highlights Compared to Prior Year Period

    • Record net sales of $196.6 million compared to $164.2 million, an increase of 19.7%
    • Product segment net sales of $170.9 million compared to $145.1 million, an increase of 17.8%
    • PetIQ’s manufactured products increased to 31% of Product segment net sales
    • Services segment net revenues of $25.7 million compared to $19.2 million, an increase of 34.1%
    • Gross margin increased 140 basis points to 18.8%; adjusted gross margin increased 130 basis points to 21.3%
    • Net loss of $14.5 million compared to a net loss of $10.1 million
    • Adjusted net loss of $0.3 million compared to adjusted net loss of $1.0 million, an improvement of $0.7 million
    • Adjusted EBITDA of $15.3 million compared to $13.0 million, an increase of 17.6%
    • 26 new wellness center openings in the fourth quarter of 2021

    Full Year 2021 Highlights Compared to Prior Year Period

    • Record net sales of $932.5 million compared to $780.1 million, an increase of 19.5%
    • Product segment net sales of $825.4 million compared to $725.7 million, an increase of 13.7%
    • PetIQ’s manufactured products were 28% of Product segment net sales
    • Services segment net revenues of $107.1 million compared to $54.3 million, an increase of 97.1%
    • Gross margin increased 270 basis points to 20.0%; adjusted gross margin increased 270 basis points to 22.2%
    • Net loss was $16.4 million compared to a net loss of $85.7 million
    • Adjusted net income of $31.5 million compared to adjusted net income of $20.1 million, an improvement of $11.4 million
    • Adjusted EBITDA of $92.9 million compared to $67.8 million, an increase of 37.0%
    • Adjusted EBITDA margin increased 130 basis points to 10.0%
    • 98 new wellness center openings in 2021

    Fourth Quarter 2021 Financial Results

    Record net sales of $196.6 million for the fourth quarter of 2021, increased 19.7%, compared to $164.2 million for the same period in the prior year. Fourth quarter net sales were driven by growth in both the Product and Services segments. The Product segment benefited from a robust and stronger than normal end to the flea and tick season with broad-based growth across all categories and continued strength in manufactured products. The Services segment benefited from the reopening of wellness centers and mobile clinics as compared to the prior year period, despite the continued labor-related headwinds experienced in the fourth quarter of 2021. Product segment sales were $170.9 million and Services segment revenues were $25.7 million in the fourth quarter of 2021.

    Fourth quarter 2021 gross profit was $36.9 million, an increase of 29.1% compared to $28.6 million in the prior year period. Gross margin increased 140 basis points to 18.8% from 17.4% in the prior year period. Adjusted gross profit was $40.2 million compared to $32.3 million in the prior year period, which reflects favorable product mix including the growth in sales of the Company’s manufactured product portfolio with items such as Capstar® and reflects the benefit of wellness center optimization. Adjusted gross margin increased 130 basis points to 21.3% for the fourth quarter 2021 compared to 20.0% in the prior year period.

    Selling, general and administrative expenses (“SG&A”) was $41.5 million for the fourth quarter of 2021 compared to $32.6 million in the prior year period. Adjusted SG&A was $34.3 million for the fourth quarter of 2021 compared to $27.1 million in the prior year period. As a percentage of net sales adjusted SG&A was 18.1% an increase of 130 basis points compared to the prior year period. The increase in SG&A on a GAAP and adjusted basis was primarily due to increased expenses to support the Company’s growth, including increased selling and advertising costs to support the Services segment wellness center clinic openings and to support growth of PetIQ owned brands in the Products segment.

    Net loss was $14.5 million for the fourth quarter of 2021 compared to a net loss of $10.1 million in the prior year period. Adjusted net loss was $0.3 million an improvement of $0.7 million compared to an adjusted net loss of $1.0 million in the prior year period.

    Fourth quarter adjusted EBITDA was $15.3 million, an increase of 17.6%, compared to $13.0 million in the prior year period. Adjusted EBITDA margin decreased slightly to 7.8% compared to 7.9% in the prior year period which reflects the timing of expenses as full year adjusted EBITDA margin of 10.0% increased 140 basis points compared to 2020.

    Adjusted gross profit, adjusted gross margin, adjusted SG&A, 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. 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.

    Segment Results

    Product:

    For the fourth quarter of 2021, Product segment net sales increased 17.8% to $170.9 million from $145.1 million in the prior year period. For comparative purposes, Product segment net sales increased 17.4%, excluding $0.5 million in sales related to loss of distribution rights for certain animal health manufacturing products, as previously communicated the last few quarters. A reconciliation table of reported net sales to pro forma net sales and adjusted EBITDA for each quarter of 2021 and the full year 2021 is included in this release. The fourth quarter increase in net sales was driven by broad-based growth across all product categories led by the flea and tick and health and wellness categories.

    Product segment adjusted EBITDA increased 15.7% to $28.7 million from adjusted EBITDA of $24.8 million in the fourth quarter of 2020. Product segment adjusted EBITDA margin in the fourth quarter of 2021 decreased 30 basis points to 16.8% compared to the prior year period.

    For the year ended December 31, 2021, Product segment net sales increased 13.7% to $825.4 million compared to $725.7 million for the prior year period. For comparative purposes, Product segment net sales increased 8.8%, excluding $36.1 million in sales related to loss of distribution rights for certain animal health manufacturing products, as previously communicated the last few quarters. Product adjusted EBITDA increased 27.4% to $149.3 million for the year ended December 31, 2021, representing an adjusted EBITDA margin of 18.1%, an increase of 190 basis points.

    Services:

    For the fourth quarter of 2021, Services segment net revenues were $25.7 million, an increase of 34.1% compared to $19.2 million in the same period last year. The increase in Services segment net revenues was driven by the re-opening of wellness centers and mobile clinics as compared to the prior year period, despite the continued labor-related headwinds the Company experienced in the fourth quarter of 2021. Services segment adjusted EBITDA was $2.8 million compared to $0.5 million in the fourth quarter of 2020.

    For the year ended December 31, 2021, Services segment net revenues were $107.1 million compared to $54.3 million for the prior year period, an increase of 97.1%. Services segment adjusted EBITDA increased $8.4 million to $11.7 million for the year ended December 31, 2021, compared to $3.4 million for the prior year period.

    Cash Flow and Balance Sheet

    As of December 31, 2021, the Company had cash and cash equivalents of $79.4 million. The Company’s long-term debt, which is comprised of its term loan and convertible debt, was $448.5 million as of December 31, 2021. The Company had total liquidity, which it defines as cash on hand plus availability, of $204.4 million as of December 31, 2021.

    Outlook

    The Company is reintroducing annual and quarterly guidance.

    For the full year 2022 the Company expects:

    • Net sales of approximately $985 million representing an increase of 5.6% compared to 2021. For comparative purposes, the Company expects net sales to increase approximately 10.0% excluding $36.1 million of sales related to loss of distribution rights for certain animal health manufacturing products, previously communicated the last few quarters.
    • Adjusted EBITDA of approximately $100 million representing an increase of 7.6% compared to 2021. For comparative purposes, the Company expects adjusted EBITDA to increase approximately 10.0%, excluding $1.8 million in adjusted EBITDA related to loss of distribution rights for certain animal health manufacturing products, previously communicated the last few quarters.

    The Company’s annual adjusted EBITDA outlook assumes adjusted SG&A to increase approximately 100 basis points to 17.3% in 2022 compared to 16.3% in 2021 as a result of an incremental $15 million, or 150 basis points of expense, to support its launch into direct-to-consumer channels, two significant new manufactured brand introductions, and continued marketing investments to help accelerate growth of its manufactured brand product portfolio. The Company expects two-thirds of the aforementioned incremental $15 million of SG&A expense to be incurred in the first half of 2022 with a majority recognized in the second quarter of 2022 and zero incremental expense in the fourth quarter of 2022. The annual outlook also assumes nominal improvement in adjusted EBITDA contribution from the Services segment given the continued volatility in the segment’s results as a result of the ongoing impact to the veterinarian labor market from the global pandemic. The Company expects 2022 net sales seasonality to be very similar to the net sales cadence in 2021 for the first two quarters of the year. In the second half of 2021, the Company benefited from a strong late flea and tick season and as a result it expects most of the net sales growth in the second half of 2022 will be weighted to the third quarter with the fourth quarter net sales up nominally.

    For the first quarter of 2022 the Company expects:

    • Net sales of approximately $270 million representing an increase of 6.0% compared to the first quarter of 2021. For comparative purposes, the Company expects net sales to increase approximately 15.3%, excluding $20.2 million of sales related to loss of distribution rights for certain animal health manufacturing products, previously communicated the last few quarters.
    • Adjusted EBITDA of approximately $28 million representing an increase of 4.1% compared to the first quarter of 2021. For comparative purposes, the Company expects adjusted EBITDA to increase 8.3%, excluding $1.0 million in adjusted EBITDA related to loss of distribution rights for certain animal health manufacturing products, as previously communicated the last few quarters. The Company’s first quarter of 2022 adjusted EBITDA outlook assumes adjusted SG&A as a percent of net sales to be relatively consistent with the first quarter of 2021 at 14.7%, despite an incremental $3 million, or 110 basis points of expense, to support two of its significant new manufactured brand introductions and continued marketing investments to help accelerate growth of its manufactured brand product portfolio.

    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 877-451-6152 and international listeners may dial 201-389-0879.

    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 22, 2022. North American listeners may dial 844-512-2921 and international listeners may dial 412-317-6671; the passcode is 13726719.

    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 2,900 retail partner locations in 42 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 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, 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; 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 ability 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” section of our Annual Report on Form 10-K for the year ended December 31, 2021 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 gross profit, adjusted gross margin, adjusted SG&A, adjusted EBITDA, and adjusted EBITDA margin.

    Adjusted net (loss) income consists of net (loss) income adjusted for tax expense, acquisition expenses, integration costs and costs of discontinued clinics, non-same-store revenue, non-same-store costs, litigation costs, loss on debt extinguishment, stock-based compensation expense, CFO transition and COVID-19 related costs. 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 gross (profit) loss on veterinarian clinics and wellness centers that are not part of same store sales and COVID related costs. Adjusted gross profit is utilized by management to evaluate the effectiveness of our business strategies.

    Adjusted SG&A consists of SG&A adjusted for acquisition expenses, stock-based compensation expense, non-same store adjustment, integration costs, COVID-19 related costs, loss on debt extinguishment and related costs, litigation expense and CFO transition costs.

    EBITDA, Adjusted EBITDA and Adjusted EBITDA margin 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 (loss) income, adjusted gross profit, adjusted gross margin, adjusted general and administrative expenses (Adjusted SG&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 income, adjusted gross profit, adjusted SG&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 gross margin, adjusted SG&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 SG&A, 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 gross margin, adjusted SG&A, 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 gross margin, adjusted SG&A, 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

    • Mobile clinic – A mobile 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 mobile clinics, these clinics are grouped as part of geographic regions.
    • 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.

    PetIQ, Inc.
    Condensed Consolidated Balance Sheets
    (Unaudited, in 000’s except for per share amounts)

            
          As adjusted1 
      December 31, 2021 December 31, 2020 
    Current assets       
    Cash and cash equivalents $79,406 $33,456 
    Accounts receivable, net  113,947  102,755 
    Inventories  96,440  97,773 
    Other current assets  8,896  8,312 
    Total current assets  298,689  242,296 
    Property, plant and equipment, net  76,613  63,146 
    Operating lease right of use assets  20,489  20,122 
    Other non-current assets  2,024  1,870 
    Intangible assets, net  190,662  213,000 
    Goodwill  231,110  231,158 
    Total assets $819,587 $771,592 
    Liabilities and equity       
    Current liabilities       
    Accounts payable $55,057 $68,131 
    Accrued wages payable  12,704  10,540 
    Accrued interest payable  3,811  903 
    Other accrued expenses  11,680  8,815 
    Current portion of operating leases  6,500  4,915 
    Current portion of long-term debt and finance leases  8,350  7,763 
    Total current liabilities  98,102  101,067 
    Operating leases, less current installments  14,843  15,789 
    Long-term debt, less current installments  448,470  403,591 
    Finance leases, less current installments  2,493  3,338 
    Other non-current liabilities  459  1,397 
    Total non-current liabilities  466,265  424,115 
    Equity       
    Additional paid-in capital  368,006  319,642 
    Class A common stock, par value $0.001 per share, 125,000 shares authorized; 29,139 and 25,711 shares issued and outstanding, respectively  29  26 
    Class B common stock, par value $0.001 per share, 100,000 shares authorized; 272 and 3,040 shares issued and outstanding, respectively    3 
    Accumulated deficit  (114,525)  (98,558) 
    Accumulated other comprehensive loss  (684)  (686) 
    Total stockholders' equity  252,826  220,427 
    Non-controlling interest  2,394  25,983 
    Total equity  255,220  246,410 
    Total liabilities and equity  $  819,587  $ 771,592  

    (1)   Amounts adjusted for adoption of ASU 2020-06

    PetIQ, Inc. 
    Condensed Consolidated Statements of Operations 
    (Unaudited, in 000’s, except for per share amounts)

                 
          As adjusted1     As adjusted1
      For the Three Months Ended  For the Year Ended
      December 31, 2021 December 31, 2020 December 31, 2021 December 31, 2020
                 
    Product sales $170,947  $145,055  $825,395  $725,705 
    Services revenue  25,689   19,153   107,133   54,346 
    Total net sales  196,636   164,208   932,528   780,051 
    Cost of Products Sold  135,729   115,306   646,402   584,401 
    Cost of services  24,013   20,320   99,733   60,462 
    Total cost of sales  159,742   135,626   746,135   644,863 
    Gross profit  36,894   28,582   186,393   135,188 
    Operating expenses            
    Selling, general and administrative expenses  41,455   32,631   170,521   138,375 
    Contingent note revaluations gain            
    Operating income (loss)  (4,561)  (4,049)  15,872   (3,187)
    Interest expense, net  6,003   6,347   24,696   22,807 
    Foreign currency (gain) loss, net  61   (235)  159   (109)
    Loss on debt extinguishment        5,453    
    Other income, net  168   131   (1,922)  (571)
    Total other expense, net  6,232   6,243   28,386   22,127 
    Pretax net loss  (10,793)  (10,292)  (12,514)  (25,314)
    Income tax expense  (3,682)  169   (3,869)  (60,413)
    Net loss  (14,475)  (10,123)  (16,383)  (85,727)
    Net loss attributable to non-controlling interest  (351)  (1,297)  (416)  (3,072)
    Net loss attributable to PetIQ, Inc. $(14,124) $(8,826) $(15,967) $(82,655)
    Net loss per share attributable to PetIQ, Inc. Class A common stock            
    Basic $(0.49) $(0.35) $(0.57) $(3.36)
    Diluted $(0.49) $(0.35) $(0.57) $(3.36)
    Weighted Average shares of Class A common stock outstanding             
    Basic  29,113   25,413   28,242   24,629 
    Diluted  29,113   25,413   28,242   24,629 

    (1)   Amounts adjusted for adoption of ASU 2020-06

    PetIQ, Inc.
    Condensed Consolidated Statements of Cash Flows 
    (Unaudited, in 000’s)

            
      For the Year Ended December 31, 
          As adjusted1 
      2021 2020 
    Cash flows from operating activities       
    Net loss $(16,383) $(85,727) 
    Adjustments to reconcile net loss to net cash provided by (used in) operating activities       
    Depreciation, amortization of intangible assets and loan fees  39,300  27,483 
    Loss on debt extinguishment  5,453   
    Gain on disposition of property, plant, and equipment  (1,183)  (238) 
    Stock based compensation expense  9,428  9,170 
    Deferred tax adjustment  3,487  59,708 
    Termination of supply agreement    7,801 
    Contingent note revaluation     
    Other non-cash activity  233  164 
    Changes in assets and liabilities       
    Accounts receivable  (11,197)  (31,652) 
    Inventories  1,283  (17,846) 
    Other assets  (1,380)  556 
    Accounts payable  (12,131)  17,435 
    Accrued wages payable  2,194  1,424 
    Other accrued expenses  4,663  7,121 
    Net cash provided by (used in) operating activities  23,767  (4,601) 
    Cash flows from investing activities       
    Proceeds from disposition of property, plant, and equipment  5,132  442 
    Purchase of property, plant, and equipment  (31,270)  (22,392) 
    Purchase of Capstar and related intangibles    (96,072) 
    Business acquisitions (net of cash acquired)     
    Net cash used in investing activities  (26,138)  (118,022) 
    Cash flows from financing activities       
    Proceeds from issuance of convertible notes    143,750 
    Payment for Capped Call options    (14,821) 
    Proceeds from issuance of long-term debt  642,568  837,675 
    Principal payments on long-term debt  (597,071)  (838,073) 
    Payment of financing fees on Convertible Notes    (5,884) 
    Tax distributions to LLC Owners  (70)  (47) 
    Principal payments on finance lease obligations  (1,926)  (1,965) 
    Payment of deferred financing fees and debt discount  (7,656)  (550) 
    Tax withholding payments on Restricted Stock Units  (937)  (595) 
    Exercise of options to purchase class A common stock  13,426  9,274 
    Net cash provided by financing activities  48,334  128,764 
    Net change in cash and cash equivalents  45,963  6,141 
    Effect of exchange rate changes on cash and cash equivalents  (13)  43 
    Cash and cash equivalents, beginning of period  33,456  27,272 
    Cash and cash equivalents, end of period $79,406 $33,456 

    (1) Amounts adjusted for adoption of ASU 2020-0


    PetIQ, Inc.
    Summary Segment Results
    (Unaudited, in 000’s)

                
     For the three months ended  For the year ended
    $'s in 000'sDecember 31, 2021 December 31, 2020 December 31, 2021 December 31, 2020
    Products segment sales$170,947  $145,055  $825,395  $725,705 
    Services segment revenue:           
    Same-store sales 18,133   16,285   81,955   45,359 
    Non same-store sales 7,556   2,868   25,178   8,987 
    Total services segment revenue 25,689   19,153   107,133   54,346 
    Total net sales 196,636   164,208   932,528   780,051 
                
    Adjusted EBITDA           
    Products 28,664   24,768   149,321   117,216 
    Services 2,797   509   11,742   3,387 
    Unallocated Corporate (16,153)  (12,256)  (68,171)  (52,811)
    Total Adjusted EBITDA$15,308  $13,021  $92,892  $67,792 

    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, 2021 December 31, 2020 December 31, 2021 December 31, 2020
    Gross profit$36,894  $28,582  $186,393  $135,188 
    Plus:           
    Non same-store gross (profit) loss(3) 3,341   3,535   15,146   11,195 
    COVID-19 related costs(5)    225      4,403 
    Adjusted gross profit$40,235  $32,342  $201,539  $150,786 
    Gross Margin %18,8%
     17,4%
     20,0%
     17,3%
    Adjusted gross margin %21,3%
     20,0%
     22,2%
     19,6%


    PetIQ, Inc.
    Reconciliation between Selling, General &Administrative (“SG&A”) and adjusted SG&A
    (Unaudited, in 000’s)

                
     For the three months ended  For the year ended
     December 31, 2021 December 31, 2020 December 31, 2021 December 31, 2020
    SG&A$41,455  $32,631  $170,521  $138,375 
    Less:           
    Acquisition costs(1)    805   92   2,620 
    Loss on debt extinguishment and related costs(2)       985    
    Stock based compensation expense 2,240   2,621   9,428   9,170 
    Non same-store adjustment(3) 2,888   1,416   8,013   5,159 
    Integration costs(4) 212   165   (876)  9,776 
    Litigation expenses 1,219   283   4,105   1,006 
    CFO Transition 597      928    
    COVID-19 related costs(5)    218      2,073 
    Adjusted SG&A$34,299  $27,123  $147,846  $108,571 
    % of Sales (GAAP)21.1% 19.9% 18.3% 17.7%
    % of Sales (Adjusted)18.1% 16.8% 16.3% 14.1%

    PetIQ, Inc.
    Reconciliation between Net Loss and Adjusted EBITDA
    (Unaudited, in 000’s)

                
     For the three months ended  For the year ended
     December 31, 2021 December 31, 2020 December 31, 2021 December 31, 2020
    Net loss$(14,475) $(10,123) $(16,383) $(85,727)
    Plus:           
    Tax expense 3,682   (169)  3,869   60,413 
    Depreciation 4,947   3,196   14,366   12,082 
    Amortization 4,654   4,502   22,336   12,815 
    Interest 6,003   6,347   24,696   22,807 
    EBITDA$4,811  $3,753  $48,884  $22,390 
    Acquisition costs(1)    805   92   2,620 
    Loss on debt extinguishment and related costs(2)       6,438    
    Stock based compensation expense 2,240   2,621   9,428   9,170 
    Non same-store net (income) loss (3) 6,229   4,951   23,159   16,354 
    Integration costs(4) 212   165   (142)  9,776 
    Litigation expenses 1,219   283   4,105   1,006 
    CFO Transition 597      928    
    COVID-19 related costs(5)    443      6,476 
    Adjusted EBITDA$15,308  $13,021  $92,892  $67,792 
    Adjusted EBITDA Margin7.8% 7.9% 10.0% 8.7%

     

    (1) Acquisition costs include legal, accounting, banking, consulting, diligence, and other costs related to completed and contemplated acquisitions.
    (2) Loss on debt extinguishment and related costs are related to our entering into two new credit facilities, including the write off of deferred financing costs and related out of pocket costs.
    (3) Non same-store revenue and costs relate to our Services Segment wellness centers with less than six full quarters of operating results, and also include pre-opening expenses.
    (4) Integration costs and costs of discontinued clinics represent costs related to integrating the acquired businesses including personnel costs such as severance and signing bonuses, consulting costs, 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.
    (5) 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, 2021 December 31, 2020 December 31, 2021 December 31, 2020
    Net loss$(14,475) $(10,123) $(16,383) $(85,727)
    Plus:           
    Tax expense (benefit) 3,682   (169)  3,869   60,413 
    Acquisition costs(1)    805   92   2,620 
    Loss on debt extinguishment and related costs(2)       6,438    
    Stock based compensation expense 2,240   2,621   9,428   9,170 
    Non same-store adjustment(3) 6,229   4,951   23,159   16,354 
    Integration costs(4) 212   165   (142)  9,776 
    Litigation expenses 1,219   283   4,105   1,006 
    CFO Transition 597      928    
    COVID-19 related costs(5)    443      6,476 
    Adjusted Net income (loss)$(296) $(1,024) $31,494  $20,088 


    (1)  Acquisition costs include legal, accounting, banking, consulting, diligence, and other costs related to completed and contemplated acquisitions.
    (2)  Loss on debt extinguishment and related costs are related to our entering into two new credit facilities, including the write off of deferred financing costs and related out of pocket costs.
    (3)  Non same-store revenue and costs relate to our Services Segment wellness centers with less than six full quarters of operating results, and also include pre-opening expenses.
    (4)  Integration costs and costs of discontinued clinics represent costs related to integrating the acquired businesses including personnel costs such as severance and signing bonuses, consulting costs, 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.
    (5) 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.
    Pro forma impact of lost of distribution
    (Unaudited, in 000’s)

             
      For the Three Months Ended  For the Year Ended
      March 31June 30September 30December 31  December 31, 2021
    Total net sales$254,347 271,011 210,534 196,636  $932,528 
    Loss Distribution (20,250)(11,830)(3,510)(480)  (36,070)
    Pro forma Net Sales 234,097 259,181 207,024 196,156   896,458 
             
    Total Adjusted EBITDA 26,861 34,359 16,364 15,308   92,892 
    Loss Distribution (1,012)(592)(175)(24)  (1,803)
    Pro forma Adjusted EBITDA$25,849 33,767 16,189 15,284  $91,089 

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