OurPet’s Company Reports Record for Fourth Quarter 2015 and Full-Year Results

FAIRPORT HARBOR, Ohio–(BUSINESS WIRE)–OurPet’s Company (OTCQX:OPCO),
a leading proprietary pet supply company, today reported record net
revenue and record net income for the three months and twelve months
ended December 31, 2015.

Net income increased 10% to a record $450,592 for the 2015 fourth
quarter from $409,341 for the same period in 2014. For the 2015
full-year, net income increased approximately 74% to a record $1,336,912
from $769,275 the prior year. Net income was $0.02 for both fourth
quarter periods and increased to a full-year record $0.07 in 2015 from
$0.04 in 2014. The 2015 fourth quarter and full-year results benefited
from specific management initiatives that resulted in lower fixed costs,
lower product costs and lower selling, general and administrative
expenses.

Net revenue increased 1% to a record $6,648,394 for the 2015 fourth
quarter compared to the same period a year ago. For the 2015 full-year,
net revenue increased approximately 5% to a record $23,819,189 from
$22,770,562 in 2014. These results were achieved despite a challenging
retail environment and the negative impact of a stronger dollar on
international sales throughout 2015.

Dr. Steven Tsengas commented, “Our record results for the 2015 fourth
quarter and full-year reflect successful execution of our business
strategy. We remain focused on growth initiatives in all three of our
key product categories; feeding and storage, toys and accessories, and
waste management and odor control. And we continue to grow our business
in the Pet Specialty, Food, Drug and Mass Retail, and E-commerce sales
channels. The 2015 fourth quarter sales benefited from a 27% increase in
E-commerce sales and a 26% increase in waste and odor management sales
compared to the same period a year ago. For the full year, sales in the
Pet Specialty and E-commerce channels increased 12% and 6%,
respectively, compared to 2014.”

Dr. Tsengas added, “During the past year we completed implementation of
our dual brand strategy, whereby we created the OurPet’s brand for the
Pet Specialty channel and the Pet Zone brand for the Food, Drug and Mass
channel. There are additional growth opportunities, particularly with
the Pet Zone brand where sales were relatively flat compared to the
prior year and we have accordingly increased our initiatives in that
sales channel. We are also adding exciting new products to our pipeline
that involve game-changing technology that is new to the industry. These
products include our Intelligent Pet Care product line, Fly-by-Spin
toys, Kitty Potty and Switchgrass/BioChar Natural Litter and new
bowl/feeder designs. All of these products and others will be launched
at next month’s Global Pet Expo in Orlando, Florida.”

Dr. Tsengas concluded, “The Company’s improved performance in 2015,
especially during the second half of the year, combined with our planned
product launches and expanded sales force position us well for 2016. We
hope to continue this positive momentum going forward.”

2015 Fourth Quarter Results

Net revenue increased 1% to $6,648,394 for the 2015 fourth quarter from
$6,594,870 the same period in 2014, led by sales growth of 26% and 8%,
respectively, in waste management and odor control and feeding and
storage products, and a 27% increase in E-commerce sales compared to the
2014 fourth quarter. International sales for the 2015 fourth quarter
increased 1% and were affected by the stronger U.S. dollar compared to
other global currencies.

Product cost reductions and purchase discounts benefited 2015 fourth
quarter gross profit which increased more than 1% to $2,124,922 compared
to the 2014 fourth quarter. Gross profit margin increased to 32.0% for
the 2015 fourth quarter from 31.8% for the same period a year ago.

Selling, general & administrative expenses decreased 6% to $1,393,106
for the 2015 fourth quarter versus the prior year due to lower
marketing, consulting and stock option expenses.

Income from operations increased 19% to $731,816 for the 2015 fourth
quarter compared to $615,562 for the same period in 2014. This was
principally due to a $27,000 increase in gross profit combined with an
$89,000 decrease in selling, general and administrative expenses.

Income tax expense for the 2015 fourth quarter was $253,751 versus
$166,284 for the same period in 2014. The Company’s effective tax rate
was 36.0% for the fourth quarter 2015 compared to 32.7% a year ago.
These increases resulted from higher pre-tax income and adjustments to
previous estimates of tax liabilities.

Net income increased 10% to $450,592 for the 2015 fourth quarter from
$409,341 for the same period last year. Net income per diluted share was
$0.02 for both periods.

EBITDA increased to $914,536 for the 2015 fourth quarter from $766,337 a
year ago primarily due to higher tax expense and net income. A
reconciliation of EBITDA to GAAP net income is provided in an attachment
to the summary financial statements.

2015 Full-Year Results

Net revenue increased 5% to $23,819,189 for the twelve months ended
December 31, 2015, from $22,770,562 the prior year. Product sales in the
waste management and odor control, feeding and storage and toys and
accessories categories increased 14%, 11% and 4%, respectively, compared
to 2014. Solid gains were realized in the Pet Specialty and E-commerce
sales channels, which increased 12% and 6%, respectively, versus 2014.

Gross profit increased 11% to $7,549,513 for the 2015 full-year from
$6,810,959 the prior year due to higher sales. Gross profit margin for
2015 increased to 31.7% from 29.9% for 2014 principally due to cost
reductions in components, freight and negotiated payment discounts.

Selling, general and administrative expenses decreased 4% to $5,389,897
for the 2015 full-year from $5,608,934 in 2014. This year-over-year
decrease was attributable to better control of staffing and outsourcing
needs.

Income from operations increased 80% to $2,159,616 for the 2015
full-year from $1,202,025 for 2014. This increase was due to the solid
increase in gross profit combined with the decrease in selling, general
and administrative expense versus the prior year.

Income tax expense was $750,592 for 2015 compared to $373,007 the prior
year as a result of higher income before taxes. The effective tax rate
increased to 36.0% for 2015 from 32.7% the prior year.

Net income increased 74% to $1,336,912 for the 2015 full-year from
$769,275 in 2014. Net income per share increased by a similar percentage
to $0.07 for the twelve months ended December 31, 2015, from $0.04 per
share a year ago.

EBITDA increased 51% to $2,899,227 for the 2015 full-year compared to
$1,919,993 the prior year due to higher net income and higher income tax
expense. A reconciliation of EBITDA to GAAP net income is provided in an
attachment to the summary financial statements.

About OurPet’s Company

OurPet’s Company designs, produces and markets a broad line of
innovative, high-quality accessory and consumable pet products in the
U.S. and overseas. Investors and customers may visit www.ourpets.com
for more information about the Company and its products. The Company’s
websites include www.ourpets.com
and www.petzonebrand.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 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 currency
rates; rising costs for raw materials and sources of supply that may be
limited or unavailable from time to time; the timing of orders booked;
and the other risks that are described from time to time in OurPet’s SEC
reports.

The above table reconciles the Company’s disclosure of Net Income per
GAAP with the non GAAP financial measure EBITDA (Earnings before
Interest, Taxes, Depreciation and Amortization). As the investment
community has often requested the EBITDA calculation to help them
evaluate performance, Management has chosen to provide this disclosure.
Although EBITDA is widely used in the investment community as a
benchmark to reflect operating performance, financing capability and
liquidity, it is not regarded as a measure of operating performance and
liquidity under generally accepted accounting principles (“GAAP”). It
also does not represent cash flows from operating activities. In
addition, the Company’s EBITDA may not be comparable to similar
indicators provided by other companies. The Presentation of this
additional information is not meant to be considered in isolation or as
a substitute for net income (loss), or any component thereof, in
accordance with GAAP.

Contacts

OurPet’s Company
Dr. Steven Tsengas, 440-354-6500 (Ext. 111)
CEO
www.ourpets.com
or
CORPORATE
COMMUNICATIONS & INVESTOR RELATIONS:
DreamTeamNetwork Austin,
Texas
512-758-8877
Editor@DreamTeamNetwork.com
www.DreamTeamNetwork.com