Dogness Reports Fiscal Year 2021 Financial Results

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Oct 29, 2021, 10:58 ET

Revenue Increases 26.9% YoY to $24.3 Million
81.4% YoY Increase in Sales of Intelligent Pet Products
Gross Margin Expands 282.8% YoY to $9.1 Million, with Gross Margin of 33.1% Compared to 9.0% a Year Ago
Comprehensive Income Increases to $6.2 million from a Loss of $10.3 million a Year Ago
EPS Grows to $0.05 per Basic and Diluted Share from a Loss of $0.33 per Basic and Diluted Share a Year Ago

DONGGUAN, China, Oct. 29, 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 fiscal year ended June 30, 2021.

Silong Chen, Chairman and Chief Executive Officer of Dogness, commented, "We are pleased with our continued strong growth but know it would have been even stronger if not dampened by the ongoing global logistics crisis. We simply cannot get products fast enough to sell. With that said, we were still able to drive strong growth with a 26.9% increase in revenue for fiscal year 2021 compared to fiscal year 2020. We are even more pleased with our expansion in gross margin and profitability. The quality of our revenue also improved, with a nearly 163% increase in sales volume for our intelligent pet products in fiscal year 2021 compared to fiscal year 2020. We have been prioritizing this important long-term growth opportunity and strategically shifted our resources to produce and promote the sales of higher margin intelligent pet products across our integrated Smart Pet Ecosystem, which includes innovative App-controlled pet feeders, pet water fountains, and smart pet toys."

"We have been working to mitigate the impact of COVID-19 and the supply chain shortages by expanding our sales through popular large retail and online shopping platforms. At the same time, we continue to upgrade our production lines to improve production efficiencies and lower costs. As a result, we were able to reduce our selling price for traditional pet products to help our customers, while still maintaining a healthy profit margin. Overall, our strategy and expanded product lines have been well received by customers worldwide, as reflected in the double-digit growth we achieved in our international sales and the momentum for our intelligent pet products. We are optimistic in our outlook and will continue to execute as we drive revenue and profit growth to build value for shareholders."

Financial Results for the Fiscal Year Ended June 30, 2021

Revenue for the fiscal year ended June 30, 2021 increased 26.9% to $24.3 million from $19.2 million in the fiscal year ended June 30, 2020. The increase in revenue was primarily attributable to an 81.4% expansion in sales of Dogness' intelligent pet products, which are benefitting from high demand and a higher average selling price than the Company's traditional pet products. Dogness has built an integrated sales platform across all channels, with major customers including Anyi Trading, Petco, Trendspark, PetSmart, Pet Value, Walmart, Target, IKEA, SimplyShe, Pets at Home, PETZL, and Petmate, and online shopping platforms, such as Amazon, Chewy.com, Boqii, Target.com, HomeDepot.com, Loews.com, Wayfair.com, JD, Tmall and Taobao, as well as live streaming sales platforms hosted by influencers.

During the fiscal year ended June 30, 2021, Dogness' total sales in international markets increased by approximately $1.2 million or approximately 13% from $10.6 million in fiscal 2020 to approximately $10.6 million in fiscal year 2021.

Cost of revenues decreased by approximately $1.6 million, or 9.6%, from approximately $16.8 million in fiscal 2020 to approximately $15.2 million in fiscal 2021. As a percentage of revenues, the cost of goods sold decreased by approximately 25.1 percentage points to 62.4% in fiscal 2021 from 87.5% in fiscal 2020. This was mainly because the Company continues to upgrade its production lines for both traditional and intelligent pet products to improve the productivity and lower the production costs.

Gross profit increased by approximately $6.8 million or 282.8%, to approximately $9.2 million in fiscal 2021 from approximately $2.4 million in fiscal 2020 primarily because the Company continues to upgrade its production lines for both traditional and intelligent pet products, which led to the improved productivity and lower the production costs. Overall gross profit margin was 37.6%, an increase of 25.1 percentage points, for the year ended June 30, 2021 as compared to 12.5% for the year ended June 30, 2020.

Comprehensive income was approximately $6.2 million or $0.05 per basic and diluted share for the fiscal year ended June 30, 2021, compared to a loss of $10.3 million or a loss of $0.33 per basic and diluted share for the fiscal year ended June 30, 2020.

The Company had a $5.5 million balance of cash and short-term investments as of June 30, 2021. This does not include approximately $4 million in gross proceeds from the Company's offering with institutional investors, which closed on July 19, 2021.

About Dogness

Dogness (International) Corporation was founded in 2003 from the belief that dogs and cats are important, well-loved family members. Through its smart products, hygiene products, health and wellness products, and leash products, Dogness' technology simplifies pet lifestyles and enhances 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 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 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

	2021		2020		2019
	For the Years Ended June 30,
	2021		2020		2019

Revenues- third party customers	$	23,112,435	$	18,261,707	$	25,887,948
Revenues – related parties		1,207,686		909,651		328,567
Total Revenues		24,320,121		19,171,358		26,216,515

Cost of revenues – third party customers		(14,501,166)		(16,146,856)		(16,583,904)
Cost of revenues – related parties		(663,742)		(633,132)		(202,606)
Total cost of revenues		(15,164,908)		(16,779,988)		(16,786,510)
Gross Profit		9,155,213		2,391,370		9,430,005

Operating expenses:
Selling expenses		1,815,771		2,336,229		2,101,403
General and administrative expenses		4,941,036		5,746,812		6,015,901
Research and development expenses		540,613		1,528,062		673,131
Loss from disposal of fixed assets		-		1,036,304		-
Impairment of fixed assets		-		281,680		-
Impairment loss of investment in equity investees		-		177,750		-
Total operating expenses		7,297,420		11,106,837		8,790,435

Income (loss) from operations		1,857,793		(8,715,467)		639,570

Other income (expenses):
Interest income (expense), net		(264,408)		15,560		616,878
Foreign exchange transaction gain (loss)		(228,260)		214,171		503,528
Other income (expenses), net		215,233		23,937		23,498
Rental income from related parties		354,968		89,411		-
Gain from disposition of a subsidiary		5,162		-		-
Total other income (expense)		82,695		343,079		1,143,904

Income (loss) before income taxes		1,940,488		(8,372,388)		1,783,474
Provision for income taxes		641,460		164,537		380,296
Net income (loss)		1,299,028		(8,536,925)		1,403,178
Less: net loss attributable to noncontrolling interest		(213,336)		(95,366)		(18,603)
Net income (loss) attributable to Dogness (International) Corporation		1,512,364		(8,441,559)		1,421,781

Other comprehensive income (loss):
Foreign currency translation income (loss)		4,879,315		(1,896,934)		(2,010,170)
Comprehensive income (loss)		6,178,343		(10,433,859)		(606,992)
Less: comprehensive loss attributable to noncontrolling interest		(161,701)		(98,635)		(19,224)
Comprehensive income (loss) attributable to Dogness (International) Corporation	$	6,340,044	$	(10,335,224)	$	(587,768)

Income (loss) earnings Per share
Basic	$	0.05	$	(0.33)	$	0.05
Diluted	$	0.05	$	(0.33)	$	0.05

Weighted Average Shares Outstanding
Basic		27,499,367		25,913,631		25,913,631
Diluted		27,554,811		25,913,631		25,941,606

DOGNESS (INTERNATIONAL) CORPORATION CONSOLIDATED BALANCE SHEETS

	2021		2020
	As of June 30,
	2021		2020
ASSETS
CURRENT ASSETS
Cash	$	4,912,442	$	1,266,873
Restricted cash		23,312		-
Short-term investments		549,895		3,551,968
Accounts receivable from third-party customers, net		2,367,326		1,916,840
Accounts receivable – related parties		515,193		559,465
Inventories, net		4,203,163		2,860,700
Due from related parties		32,528		-
Prepayments and other current assets		1,662,272		1,471,612
Total current assets		14,266,131		11,627,458

Property, plant and equipment, net		69,876,039		43,533,512
Right-of-use lease assets		5,170,395		5,123,898
Intangible assets, net		2,223,285		2,104,803
Long-term investments in equity investees		1,703,900		1,046,360
Deferred tax assets		605,658		115,230
TOTAL ASSETS	$	93,845,408	$	63,551,261

LIABILITIES AND EQUITY
CURRENT LIABILITIES
Short-term bank loans	$	704,446	$	5,142,000
Current portion of long-term loan		796,416		-
Accounts payable		847,151		705,223
Accounts payable – related parties		350,199		305,215
Due to a related party		2,001,940		25,462
Advance from customers		209,508		152,299
Taxes payable		4,443,192		2,814,411
Accrued liabilities and other payable		11,737,680		1,452,408
Operating lease liabilities, current		171,803		172,716
Total current liabilities		21,262,335		10,769,734

Long term bank loan		6,557,608		73,300
Operating lease liabilities, non-current		1,123,060		1,200,299
TOTAL LIABILITIES		28,943,003		12,043,333

Commitments		-		-

EQUITY
Common stock, $0.002 par value, 100,0000,000 shares authorized, 29,624,814 and 25,913,631 issued and outstanding as of June 30, 2021 and 2020, respectively
Class A Common stock		41,111		33,689
Class B Common stock		18,138		18,138
Common stock
Additional paid-in capital		60,355,278		53,221,610
Statutory reserve		291,443		191,716
Retained earnings		4,628,708		3,216,071
Accumulated other comprehensive loss		(960,285)		(5,787,965)
Total Dogness (International) Corporation stockholders' equity		64,374,393		50,893,259

Noncontrolling interest		528,012		614,669
Total equity		64,902,405		51,507,928

TOTAL LIABILITIES AND EQUITY	$	93,845,408	$	63,551,261