Small-Cap Investor Forum

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OurPet’s Company (OPCO) Pitch-Perfect Product Mix Nails Burgeoning Pet Market High-Income Household Demo

American Pet Products Association (APPA) data forecasts that Americans will spend upwards of $62.75 billion on their pets this year (http://dtn.fm/n76B4), with the supplies segment continuing to rank a close third, just behind veterinary care and food, at around 23.8 percent of the pie. With nearly 163 million cats and dogs alone occupying households and hearts throughout this great country, the consolidative forces within the pet supply industry that sparked merger talks between the two biggest players recently, privately-owned (CVC Capital Partners and the Canada Pension Plan Investment Board) PETCO and PetSmart, are quite easy to understand. There is a massive, steadily growing market out there to be tapped and the domestic pet store industry, which has grown to some $18.5 billion in revenues as of this year and which is on track to grow by just over three percent per annum through 2021, has become fiercely contested territory.

The aforementioned merger talks may have collapsed under the pressure of scrutiny from U.S. antitrust regulatory authorities, but that collapse merely set the stage for the $8.7 billion leveraged buyout of PetSmart (again via private equity, this time led by BC Partners). Any savvy investor can smell the opportunity here, especially for what an IBIS World report out earlier this year explained as the hottest segment moving forward: premium products and services. Another recent report, this time by Packaged Facts from late 2015, sees the overall pet industry growing to nearly $92 billion in sales by 2019, and affirms the general consensus about high-income households being a major demographic for pet product brands.

Little surprise then in all of this market momentum that innovative developer of high-quality, super-premium pet toys and accessories, OurPet’s Company (OTCQX: OPCO) has continued to wow investors with its bottom line performance metrics. A combination of ingenious product development/design, guided by a deep management bench of industry veterans, and pitch-perfect product execution when it comes to the interests of its core markets, has collectively buoyed the company’s net income and revenue performance. Amid boisterous consumer activity, as people continue to respond strongly with positive feedback to the company’s newest designs, OPCO’s raw financial performance has climbed to levels surpassing even the company’s own previous YOY records set in Q4 2015 (ended December 31). For Q1 2016 (ended March 31), OPCO posted handsome net revenue gains of 10.3 percent compared to Q1 2015, and a whopping 24.7 percent increase in net income over the same interval.

Primary driving force behind the company’s ever-growing portfolio of lovingly engineered pet products, Dr. Steve Tsengas, was keen to point out the company’s marketing efficacy at the time of the Q1 financials release. Noting in particular how good for business the Q1 kick-off every year of OPCO’s newest offerings was, done via the widely-attended international trade show presented by the APPA and Pet Industry Distributors Association in Orlando, Florida, known as the Global Pet Expo. Dr. Tsengas’s multi-decade quest to bring the power of his vast experience in holistic, integrated and naturopathic health to the development of high-end, signature pet brands, is really starting to pay off for shareholders nowadays. What with the successful introduction this year of the company’s Intelligent Pet Care™ line, featuring BlueTooth® and wireless connectivity, for its SmartScoop® – Intelligent Litter Box, SmartLink™ Feeder – Intelligent Pet Bowl, and SmartLink™ Waterer – Intelligent Water Fountain.

The debut of other products, like the company’s 100% Natural Switchgrass BioChar litter, further enhances its growing brand presence among those key high-income households that every product developer today is trying to court. And OurPet’s Company has a thriving online ecommerce presence, both via its own site and ecommerce giants like Amazon, where the company’s products typically have superb reviews/ratings from customers.

While small physical operators in the industry continue to come under fire from big-box specialty stores, the industry continues to consolidate and more of the retail transactions migrate to digital (with mobile leading the way), a company like OPCO is supremely well-positioned to profit through a tight mix of killer designs that have lasting brand/product appeal. Appeal that is based on robust materials, intelligent engineering, and a deep-seated need to understand the psychology of pets, so that products can be made to enhance the lives of what are for most households just another beloved member of the family.

For more information, visit the company’s website at www.ourpets.com