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Pet Ecology Brands, Inc. Announces Gross Revenue and Earnings Guidance for 2006
Company Projects Gross Revenues of $30,265,318, Net Income of $11,174,887 and Earnings of $7,011,650
DALLAS, TX, Jan 11, 2006 (MARKET WIRE via COMTEX) -- Pet Ecology Brands, Inc. (OTC: PECB) -- www.petecology.com -- announced today it has completed its management review of operations for its current year ending December 31, 2006. Based upon this review, the Company announces its guidance for the financial results it expects to achieve in 2006. The Company projects recognizing $ 30,265,318 in gross revenues during 2006. The Company anticipates marketing a total of seven products and product line extensions in 2006. Currently available are Scientific Professional Cat Litter and the Company's recently announced Professional Breeder's bag, for high-volume, professional users. K-9 Fat Free Dog Treats, with their new packaging and updated design, are scheduled to be available for shipping within the next three weeks. The Company anticipates launching its fat free cat treats and vitamin enhanced dog treats by the end of March, and also a line of reduced fat and sodium microwavable gourmet cat dinners at the end of June. Also planned are line extensions on its patented litter that are designed to help indicate pregnancy and diabetes.
The Company projects penetrating approximately 15,000 pet retail outlets by the end of 2006 with all seven product lines, which is approximately 70% of the total pet retail outlets available to the Company in the United States and Canada. In addition, the Company's 2006 projections include penetration in another 16,000 retail distribution outlets, made up of professional cat breeders and veterinarians, for a combined total of over 30,000 distribution outlets by the end of the year. Presently, the Company has implemented distribution agreements with 8 distributors, representing potential market penetration into 12,000 specialty retailers, veterinarians, and breeders, located throughout the United States and Canada. The Company will begin a direct mail campaign to over 14,000 professional cat breeders this month, as well as an introductory campaign for its K-9 Fat Free Dog Treats. The Company is currently attending the North American Veterinary Conference in Orlando, FL, presenting its products to over 10,000 veterinary professionals. The Company is also projecting $2-$3,000,000 in media costs for 2006, including print, television, radio, and internet media, as well as major trade journals and pet-oriented consumer magazines, such as Pet Products News, Cat Fancy, Dog Fancy, Veterinary Practice News, Cats & Kittens, Cats USA, and Kittens USA. National advertisements on cable and network channels and regional TV outlets are scheduled to begin in February 2006. The Company will also sponsor various animal charities and events throughout the country. A sponsorship agreement was recently made with ARF House, located in Sherman, Texas, the 3rd largest animal rescue organization in the U.S.
Gross revenues of the Company will be enhanced with its licensing agreements presently being finalized for the United States mass market, the European specialty pet retail market, and the mass market in Asia. The Company has decided that its launch of several of its products in the mass market in the United States, as well as Europe and Asia, is better accomplished in the short term through licensing, as opposed the Company incurring the substantial costs associated with such launches. The Company should recognize $3,950,000 of licensing revenues in 2006, which has very little or no direct costs associated with this revenue stream, and thereby will be recognized as net income by the Company.
The Company anticipates recognizing average gross margins of 50% on its seven product lines during 2006. However, the Company also projects a substantial increase in marketing and general administrative expense due to its continuing national rollout of its various products. This includes adding a minimum of 10 support staff and customer care representatives in its home office in Dallas, as well as hiring, training and monitoring a minimum of 20 field representatives, who will work exclusively for the Company and be located in the top 20 geographic areas where the Company has maximum specialty retailer penetration. The Company presently has 3 field representatives covering Texas, Pennsylvania and Indiana, and anticipates hiring and training a minimum of 2 additional field representatives per month over the next eight months.
Operating income for 2006 is projected to be $ 11,174,887, pre-tax income of $8,094,847 and with the utilization of approximately $5,000,0000 of net operating loss carryforward due to the Company's start-up losses, the Company should achieve after-tax earnings of $7,011,650. Based upon an estimated 83,461,654 outstanding shares at the end of 2006, the Company anticipates $ .084 of earnings per share in 2006. However, the Company's earnings could be diluted by stock grants and stock options available to senior management based upon the achievement of the Company's projected goals including gross revenues, earnings, timely new product launches and market penetration. The maximum dilution in 2006 through these incentive stock options and stock grants should not dilute earnings below approximately $ .07 per share, if all such options and grants are fully vested in 2006.
Jane Lorenzen, Chief Operating Officer of Pet Ecology, in discussing the Company's guidance stated: "We believe that 2006 will be the breakout year for our company which is the culmination of several years of research and development, strategic planning and the hiring of some of the best professionals in our industry. We proved in 2005 that our marketing strategy of specifically targeting the specialty pet retailer, professional breeder and veterinarian channels, was the correct strategy for a company such as ours, which has unique products new to the pet products industry. Our strategy is to continue to launch innovative products in 2006 and beyond, to these established distribution channels, and thereby avoid significant customer acquisition costs associated with a launch of our products into the mass market. Although there are substantial challenges ahead for our officers and directors in managing our growth and the significant amount of product launches in 2006, we believe that we have the right management and marketing professionals in place to achieve our objectives in 2006. We will use these projections as our benchmarks for each month in 2006, and plan to announce each month's progress to the public by the 10th of the following month."
About Pet Ecology Brands, Inc.
Pet Ecology Brands, Inc. has developed a revolutionary patented cat litter that destroys urine odor, clumps, and is earth-friendly. The litter is ultra-lightweight and convenient to use (3lbs works like 21lbs of clay/sand based products); it is 100% flushable and safe for sewer and septic tank systems. It is completely safe for cats and our environment, and does not contain any sodium bentonite, as used in competing brands. The design helps to protect the landfills, and yet does everything that clay litters do... and more. It has the ability to help indicate certain diseases commonly occurring in cats. The technique used is similar to that found in Merck's Veterinarian Manual. However, this litter not only warns of possible illness, but may also help indicate how far along the illness may be by the color the litter changes to, thereby providing the pet owner significant additional benefits and an early warning system concerning the cat's health.
A 20lb package configuration is scheduled for release in the week of January 9, 2006, designed specifically for professional breeders & kennels, and will also be available for consumers in early Spring 2006.
Pet Ecology's K-9 Fat Free Dog Treats(TM) are the first fat free treats on the market that meet the standards of the U.S. Department of Agriculture, and offer dog owners an effective means to provide their pets with a non-fat tasty treat. They are also cholesterol free and sodium free. According to U.S. News & World Report, "the number one health problem for dogs is obesity." Today, dogs are fed fat rich food and treats, and often get significantly less exercise than required to maintain an ideal weight and healthy condition. Overweight dogs are more prone to serious injury, skeletal stress, and the same complications that people experience with significant weight gain via fat rich diets, ranging from heart and lung problems, to skin and kidney diseases, to circulatory and immune system issues.
Other products anticipated being launched by Pet Ecology Brands in 2006 include the first fat free cat treat, a vitamin enhanced dog treat, a low sodium and low fat microwavable gourmet cat dinner; and two product line extensions for the Scientific cat litter line to help indicate feline pregnancy and diabetes.
SAFE HARBOR STATEMENT
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: The statements, other than the statements of historical facts may be deemed to contain forward-looking statements with respect to events, the occurrence of which involves risk and uncertainties, including, without limitation, demand and competition for the company's products and services, the availability to the company of adequate financing to support its anticipated activities, the ability of the company to generate cash flow from operations and the ability of the company to manage its operations.
Investor Relations Contact: Gerald Kieft or Ryan Audin Wall Street Resources, Inc. 2646 SW Mapp Road, Suite 303 Palm City, Florida 34990 772-219-7525 www.wallstreetresources.net
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