If Ralph Waldo Emerson’s theorem, paraphrased as
‘build a better mousetrap, and the world will beat a path to your door’, is
valid, OurPet’s Company (OTCQX: OPCO) is following ‘a broad hard-beaten road’
to success. OurPet’s Company got into the pet care industry precisely to make
the aphoristic mousetrap better. It’s doing that and making new mousetraps too.
Writing in 1855, Emerson was expressing his belief that ‘common fame’, what we
would now call a good reputation, would eventually make itself known, which is
true for OurPet’s Company, a company with a reputation for innovation. It is a
company that aimed to revolutionize and disrupt the rather staid pet care
industry and has already been doing so for over 20 years. The rewards from this
creative approach have been showing up in both the top and bottom lines.
Net revenues have increased steadily over the past
five years, rising at a compound annual growth rate (CAGR) of 6.86 percent.
This is well above the industry CAGR of 4.44 percent. OurPet’s Company’s sales
in 2010 were $17.1M. The latest 10-K filing reports sales in 2015 were $23.8M.
Gross profit has been improving, as well; and so has the gross profit margin,
which has climbed from 23.6 percent in 2011 to 31.7 percent in 2015.
Particularly encouraging for shareholders has been the moderate increase in
outstanding shares, which went up by a little over 10 percent during the last
five years. In addition, net income per share has risen by 600 percent from a
paltry $0.01 in 2011 to $0.07 in 2015. Taken together with the increase in
income available to shareholders, this shows modest dilution risk.
OurPet’s Company has been serving the pet care
market since 1995. It started with just one product: the Big Dog Feeder®. Since
then its product line has exploded. The company has approximately 1,000
stock-keeping units (SKUs) available to customers over a diversified range of
product solutions. Added to the current product offerings is a broad pipeline
of now-developing and soon-to-be-developed products and line extensions based
on OurPet’s Company’s 160 patents issued and pending.
OurPet’s Company’s strategy is to focus on
high-growth categories in the pet care market, which overall is expected to
reach $62.75 billion in 2016. The company is in the feeding and storage systems
segment, which is estimated at $100M annually, with novel products such as the
Barking Bistro®, the High Rise Diner® and its OurPets® Tilt-A-Bowls. It has a
foothold in the $250M a year feline waste and odor control category with its
SmartScoop® Intelligent Litter Box, Kitty Potty™ No Touch Litter Box System and
the OurPets® Switchgrass Natural Cat Litter with BioChar.
It’s also blazing a trail in the toys and
accessories segment, which is estimated at $1.0 billion annually, with the
amazing OurPets® Catty Whack® and the Intelligent Pet Care® line of products.
The Intelligent Pet Care® line applies Bluetooth and Wi-Fi technologies to keep
us in closer touch with our pets by signaling changes in their behavior through
digital applications. OurPet’s Company’s mission statement is ‘to exceed pet
and pet parent expectations with innovative solutions’. They might have added
investor expectations to that declaration.
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