- Revenue Increases 6.7% YoY to $12.2
Million
- 60.3% YoY Increase in Sales of Intelligent Pet
Products
- U.S. Sales Increase 41.7% YoY
- China Sales Increase 4.8% YoY
- Gross Margin Improves to 39.1%
- Comprehensive Income Increases to $5.0 million from a Loss of $1.2 million a Year Ago
- EPS Grows to $0.03 per Basic
and Diluted Share from a Loss of $0.01 per Basic and Diluted Share a Year
Ago
PLANO, Texas, June 4, 2021 /PRNewswire/ -- Dogness
(International) Corporation ("Dogness" or the "Company") (NASDAQ:
DOGZ), a developer and manufacturer of a comprehensive line of
Dogness-branded, OEM and private label pet products, today
announced its unaudited financial results for the six months ended
December 31, 2020.
Silong Chen, Chairman and Chief
Executive Officer of Dogness, commented, "We made excellent
progress as we continue to drive our growth strategy and help
customers adjust to COVID-19's challenges. Our supply chain
initiatives gave us a competitive advantage as we were able to get
the products customers needed to their favorite retailers to buy,
while other suppliers were stuck on ships or in overseas
ports. This is a testament to our operations team, which
quickly adjusted to the changing supply chain conditions and
logistics hurdles. During this period, we maintained extra
close engagements with our customers, as we worked to understand
their multi-quarter demand forecasts in order to have adequate
inventory on hand of the right products."
Mr. Chen continued, "We continue to do a great job expanding our
distribution footprint in all key markets and all channels.
For example, we recently announced agreements with Petco, Costco
and Chewy, to name a few. In December, we also announced an
OEM order for harnesses, leashes and other pet products, expected
to be valued at $4 million. Our
business is building momentum, which we expect will continue as we
move through 2021. Over the coming quarters, we expect to
further diversify our product offerings and increase our use of
online shopping platforms to gain even broader access to potential
customers, especially customers interested in our fast-growing
smart pet products. We believe that through continuous
product innovation, further sales success and a shift to our higher
margin smart tech products, we will achieve expanded profitability
and an even greater return on investment for our stockholders."
Financial Results for the Six Months Ended December 31, 2020
Revenue for the six months ended December
31, 2020 increased 6.7% to $12.2
million from approximately $11.5
million for same period last year. The increase in revenue
was primarily attributable to higher sales of the Company's smart
pet products.
Sales of smart pet products increased 60.3% year over year,
accounting for 27.6% of total revenue for the six months ended
December 31, 2020, compared to 18.4%
of total revenue in the year ago period. The Company expects
sales of its smart pet products, which typically have higher
selling prices than other traditional pet products, will continue
to increase based on its order backlog and discussions with
customers worldwide.
During the six months ended December 31,
2020, Dogness' products were sold in 25 countries. Export
sales accounted for 47.5% and 46.5% of total sales for the six
months ended December 31, 2020 and
2019, respectively, while China
domestic sales accounted for 52.5%% and 53.5% for the six months
ended December 31, 2020 and 2019,
respectively. The Company's major customers include, Anyi
Trading, Petco, Trendspark, PetSmart, Pet Value, Walmart, Target,
IKEA, SimplyShe, Pets at Home, PETZL, and Petmate. To
mitigate the impact caused by COVID-19, Dogness expanded it sales
channels to more online shopping platforms, such as Amazon, Chewy,
JD, Tmall and Taobao, as well as live streaming sales platforms
hosted by influencers. These ecommerce sales normally have
higher profit margin than traditional sales channels.
Cost of revenues was approximately $7.5
million and $7.7 million for
six months ended December 31 2020 and
2019, respectively. As a percentage of revenues, the cost of goods
sold decreased by approximately 6.2 percentage points to 60.9% for
the six months ended December 31,
2020 from 67.1% for the six months ended December 31, 2019. This mainly reflects the
benefit of continued upgrades to the Company's production lines for
both traditional and smart pet products to improve productivity and
lower production costs.
Gross profit increased by approximately $1.0 million or 26.7%, to approximately
$4.8 million for the six months ended
December 31, 2020 from approximately
$3.8 million for the six months ended
December 31. 2019. Overall
gross profit margin was 39.1%, an increase of 6.2 percentage
points, as compared to 32.9% for the six months ended December 31, 2019.
Comprehensive income was approximately $5.0 million or $0.03 per basic and diluted share for the six
months ended December 31, 2020,
compared to a loss of $1.2 million or
a loss of $0.01 per basic and diluted
share for the six months ended December 31,
2019.
The Company had a $2.3 million
balance of cash and short-term investments as of December 31, 2020. This does not include
approximately $7.4 million in gross
proceeds from the Company's offering with institutional investors,
which closed on January 20, 2021.
New State-of-the-Art Facility Opened
Over the last 18 years, Dogness has been an innovation leader,
which gives the Company a distinct competitive advantage. The
Company took another major step forward with the grand opening of
its new high-tech headquarters in November 2020. The new
Dogness headquarters, based in Dongguan,
China, features an expansive 30,000 square meter high-tech
campus, with dedicated state-of-the-art facilities for
manufacturing, R&D, sales and marketing, IoT platform,
warehousing and logistics, and more. The new headquarters
also includes a dynamic showroom to display the full range of
Dogness pet products, many of which are covered under the Company's
more than 200 domestic and foreign patents. The new premier
location builds upon the Dogness employee-focused culture and will
be a recruiting advantage as the Company attracts top notch talent
in support of its continuous R&D effort and increased customer
demand.
Recent Business Highlights
May 12, 2021 – Secured over
RMB 2 million in new orders and
received two prestigious gold awards for Quality Ingenuity and
Brand Quality at the 7th China (Shenzhen) International Pet Supplies
Exhibition trade show. This was one of the first in-person
trade show events since COVID-19 hit and the Shenzhen pet expo far exceeded the Company's
expectations.
April 8, 2021 – Reported
its e-commerce sales in China
increased 24 times for calendar year 2020, as compared to calendar
year 2019. Led by the Company's expanded smart pet product line,
Dogness is far outpacing the overall market, with its online sales
in China in calendar year 2020
increasing approximately 2,400 percent, compared to approximately 2
percent overall growth for China's
urban pet market (dog and cat).
March 2, 2021 – Announced
the launch of the latest Dogness Smart GPS Pet Tracker, the next
generation of smart pet tracking, boasting real-time positioning
with pin point accuracy. Dogness anticipates initial delivery in
the second quarter of 2021.
January 20, 2021 – Closed a
previously announced offering with institutional investors, raising
approximately $7.4 million in gross
proceeds from the sale of 3,455,130 Class A common shares at a
price of $2.15 per share and warrants
to purchase an aggregate of 1,727,565 Class A common shares, before
deducting placement agent fees and other standard offering
expenses. The Company also issued a warrant to purchase
276,410 Class A common shares to the placement agent. The warrants
are all exercisable at $2.70 per
share.
January 14, 2021 – Received
formal initial orders for more than 4,000 units of its 2L
programmable automatic dog and cat feeders from Petco, which
operates approximately 1,600 retail stores across the U.S.
This order follows the successful fulfillment of Petco's previous
test program orders, as Dogness expands its relationship with one
of the pet industry's largest, most successful online and retail
companies.
December 17, 2020 –
Appointed Andy Alfaro as a national
sales director. Mr. Alfaro brings over thirty years of experience
in sales to Dogness. His proven success managing national and
regional retail, wholesale and e-commerce accounts includes Best
Buy, Amazon, Wal-Mart, Sam's Club, JCPenney, Shop HQ, Michaels,
Home Depot, 7-11, Synnex, Superior and Petra.
December 7, 2020 –
Announced an OEM order for certain pet products including harnesses
and leashes, expected to be valued at $4
million. The customer is one of the world's largest
small format pet specialty retailers, with more than 600 stores
around the world.
November 20, 2020 –
Announced an expansion of its sales activities at Chewy, Inc.
(NYSE: CHWY), a trusted online destination for pet parents.
Dogness has been a supplier to Chewy since January 2019 and is excited to keep building on
its successful relationship.
November 19, 2020 –
Announced an expansion of its sales activities at Costco Wholesale
Corporation ("Costco"), with both in-store and online special
events to promote the high quality Dogness smart pet product
line. Dogness has a unique position as one of, if not the
only, smart pet product lines being made available to Costco's
members, which is a testament to the high-quality, innovative and
durable pet products Dogness is known for.
About Dogness
Dogness (International) Corporation was founded in 2003 from the
belief that pet dogs and cats are important, well-loved family
members. Through its smart products, hygiene products, health and
wellness products, and leash products, Dogness is able to simplify
pet lifestyles, make them more scientific, and enhance the
relationship between pets and pet caregivers. The Company ensures
industry-leading quality through its fully integrated vertical
supply chain and world-class research and development capabilities,
which has resulted in over 200 patents and patents pending.
Dogness products reach families worldwide through global chain
stores and distributors. For more information, please visit:
ir.dogness.com.
Forward Looking Statements
No statement made in this press release should be interpreted as
an offer to purchase or sell any security. Such an offer can only
be made in accordance with the Securities Act of 1933, as amended,
and applicable state securities laws. Certain statements in this
press release concerning our future growth prospects are
forward-looking statements regarding our future business
expectations intended to qualify for the "safe harbor" under the
Private Securities Litigation Reform Act of 1995, which involve a
number of risks and uncertainties that could cause actual results
to differ materially from those in such forward-looking statements.
The risks and uncertainties relating to these statements include,
but are not limited to, risks and uncertainties regarding lingering
effects of the COVID-19 pandemic on our customers' businesses and
end purchasers' disposable income, our cooperation with telecom
companies to secure 4G coverage, our ability to meet development,
production and shipping targets, our ability to raise capital on
any particular terms, fulfillment of customer orders, fluctuations
in earnings, fluctuations in foreign exchange rates, our ability to
manage growth, our ability to realize revenue from expanded
operation and acquired assets in China and the U.S., our ability to attract and
retain highly skilled professionals, client concentration, industry
segment concentration, reduced demand for technology in our key
focus areas, our ability to successfully complete and integrate
potential acquisitions, and unauthorized use of our intellectual
property and general economic conditions affecting our industry.
Additional risks that could affect our future operating results are
more fully described in our United States Securities and
Exchange Commission filings. These filings are available at
www.sec.gov. Dogness may, from time to time, make additional
written and oral forward-looking statements, including statements
contained in the Company's filings with the Securities and Exchange
Commission and our reports to shareholders. In addition, please
note that any forward-looking statements contained herein are based
on assumptions that we believe to be reasonable as of the date of
this press release. The Company does not undertake to update any
forward-looking statements that may be made from time to time by or
on behalf of the Company unless it is required by law.
DOGNESS
(INTERNATIONAL) CORPORATION
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
AND COMPREHENSIVE
INCOME (LOSS)
|
(Unaudited)
|
|
|
|
|
|
|
For The Six Months
Ended December 31,
|
|
|
|
|
|
2020
|
|
|
2019
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues - third
party customers
|
|
$
|
11,697,156
|
|
|
$
|
10,887,822
|
|
|
|
Revenues – related
parties
|
|
|
548,351
|
|
|
|
588,733
|
|
|
|
Total
Revenues
|
|
|
12,245,507
|
|
|
|
11,476,555
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues –
third party customers
|
|
|
(7,170,811)
|
|
|
|
(7,344,048)
|
|
|
|
Cost of revenues –
related parties
|
|
|
(285,258)
|
|
|
|
(351,601)
|
|
|
|
Total cost of
revenues
|
|
|
(7,456,069)
|
|
|
|
(7,695,649)
|
|
|
|
Gross
Profit
|
|
|
4,789,438
|
|
|
|
3,780,906
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
Selling
expenses
|
|
|
1,000,340
|
|
|
|
933,861
|
|
|
|
General and
administrative expenses
|
|
|
2,186,886
|
|
|
|
2,936,038
|
|
|
|
Research and
development expenses
|
|
|
254,924
|
|
|
|
148,528
|
|
|
|
Total operating
expenses
|
|
|
3,442,150
|
|
|
|
4,018,427
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from
operations
|
|
|
1,347,288
|
|
|
|
(237,521)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
expenses:
|
|
|
|
|
|
|
|
|
|
|
Interest expense,
net
|
|
|
(111,690)
|
|
|
|
(125,384)
|
|
|
|
Foreign exchange
transaction gain (loss)
|
|
|
(119,082)
|
|
|
|
46,905
|
|
|
|
Other income
(expenses), net
|
|
|
(158,565)
|
|
|
|
(3,766)
|
|
|
|
Gain from disposition
of a subsidiary
|
|
|
5,104
|
|
|
|
|
|
|
|
Total other expense,
net
|
|
|
(67,103)
|
|
|
|
(82,245)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss)
before income taxes
|
|
|
1,280,185
|
|
|
|
(319,766)
|
|
|
|
Provision for
income taxes
|
|
|
530,679
|
|
|
|
104,730
|
|
|
|
Net income
(loss)
|
|
|
749,506
|
|
|
|
(424,496)
|
|
|
|
Less: net loss
attributable to noncontrolling interest
|
|
|
(89,742)
|
|
|
|
(41,402)
|
|
|
|
Net income (loss)
attributable to Dogness (International)
Corporation
|
|
|
839,248
|
|
|
|
(383,094)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|
Foreign currency
translation income (loss)
|
|
|
4,171,436
|
|
|
|
(826,508)
|
|
|
|
Comprehensive
income (loss)
|
|
|
4,920,942
|
|
|
|
(1,251,004)
|
|
|
|
Less: comprehensive
loss attributable to noncontrolling interest
|
|
|
(39,791)
|
|
|
|
(48,046)
|
|
|
|
Comprehensive
income (loss) attributable to Dogness
(International) Corporation
|
|
$
|
4,960,733
|
|
|
$
|
(1,202,958)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (Loss)
Per share
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.03
|
|
|
$
|
(0.01)
|
|
|
|
Diluted
|
|
$
|
0.03
|
|
|
$
|
(0.01)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average
Shares Outstanding
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
25,913,631
|
|
|
|
25,913,631
|
|
|
|
Diluted
|
|
|
25,931,146
|
|
|
|
25,913,631
|
|
|
|
DOGNESS
(INTERNATIONAL) CORPORATION
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(Unaudited)
|
|
|
|
|
|
|
|
|
As of December
31,
|
|
As of June
30,
|
|
|
|
2020
|
|
2020
|
|
ASSETS
|
|
|
|
|
|
|
|
|
CURRENT
ASSETS
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
1,351,532
|
|
|
$
|
1,266,873
|
|
Short-term
investments
|
|
|
933,910
|
|
|
|
3,551,968
|
|
Accounts receivable
from third-party customers, net
|
|
|
3,303,159
|
|
|
|
1,916,840
|
|
Accounts receivable –
related parties
|
|
|
497,974
|
|
|
|
559,465
|
|
Inventories,
net
|
|
|
4,768,037
|
|
|
|
2,860,700
|
|
Prepayments and other
current assets
|
|
|
1,453,973
|
|
|
|
1,471,612
|
|
Advance to suppliers
- related party
|
|
|
29,240
|
|
|
|
-
|
|
Total current
assets
|
|
|
12,337,825
|
|
|
|
11,627,458
|
|
|
|
|
|
|
|
|
|
|
Property, plant and
equipment, net
|
|
|
53,495,926
|
|
|
|
43,533,512
|
|
Right-of-use lease
assets, net
|
|
|
5,308,717
|
|
|
|
5,123,898
|
|
Intangible assets,
net
|
|
|
2,238,206
|
|
|
|
2,104,803
|
|
Long-term investments
in equity investees
|
|
|
1,377,900
|
|
|
|
1,046,360
|
|
Deferred tax
assets
|
|
|
128,969
|
|
|
|
115,230
|
|
TOTAL
ASSETS
|
|
$
|
74,887,543
|
|
|
$
|
63,551,261
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
EQUITY
|
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES
|
|
|
|
|
|
|
|
|
Short-term bank
loans
|
|
$
|
910,000
|
|
|
$
|
5,142,000
|
|
Current portion of
long term bank loans
|
|
|
623,669
|
|
|
|
-
|
|
Accounts
payable
|
|
|
904,135
|
|
|
|
705,223
|
|
Accounts payable –
related parties
|
|
|
3,963
|
|
|
|
305,215
|
|
Due to a related
party
|
|
|
2,035,922
|
|
|
|
25,462
|
|
Advance from
customers
|
|
|
177,314
|
|
|
|
152,299
|
|
Taxes
payable
|
|
|
3,613,007
|
|
|
|
2,814,411
|
|
Accrued liabilities
and other payable
|
|
|
1,659,472
|
|
|
|
1,452,408
|
|
Operating lease
liabilities, current
|
|
|
164,694
|
|
|
|
172,716
|
|
Total current
liabilities
|
|
|
10,092,176
|
|
|
|
10,769,734
|
|
|
|
|
|
|
|
|
|
|
Long term bank
loans
|
|
|
7,027,723
|
|
|
|
73,300
|
|
Operating lease
liabilities, non-current
|
|
|
1,197,195
|
|
|
|
1,200,299
|
|
TOTAL
LIABILITIES
|
|
|
18,317,094
|
|
|
|
12,043,333
|
|
|
|
|
|
|
|
|
|
|
Commitments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EQUITY
|
|
|
|
|
|
|
|
|
Common shares, $0.002
par value, 100,0000,000 shares authorized,
25,913,631 issued and outstanding
|
|
|
|
|
|
|
|
|
Class A Common
shares
|
|
|
33,689
|
|
|
|
33,689
|
|
Class B Common
shares
|
|
|
18,138
|
|
|
|
18,138
|
|
Additional paid-in
capital
|
|
|
53,292,689
|
|
|
|
53,221,610
|
|
Statutory
reserve
|
|
|
194,401
|
|
|
|
191,716
|
|
Retained
earnings
|
|
|
4,052,634
|
|
|
|
3,216,071
|
|
Accumulated other
comprehensive loss
|
|
|
(1,666,480)
|
|
|
|
(5,787,965)
|
|
Total Dogness
(International) Corporation stockholders' equity
|
|
|
55,925,071
|
|
|
|
50,893,259
|
|
|
|
|
|
|
|
|
|
|
Noncontrolling
interest
|
|
|
645,378
|
|
|
|
614,669
|
|
Total
equity
|
|
|
56,570,449
|
|
|
|
51,507,928
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES
AND EQUITY
|
|
$
|
74,887,543
|
|
|
$
|
63,551,261
|
|
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SOURCE Dogness International Corporation