PLANO, Texas, Oct. 16, 2024 /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 financial results for the fiscal year ended June 30, 2024.
Silong Chen, Chief Executive Officer of Dogness, commented: "We continue to face challenges due to intense competition in the domestic market and the ongoing trade dispute between China and the United States, which are impacting and will likely continue impacting our domestic and export sales in the near future. In fiscal 2024, Dogness experienced intensified competition and a complex macro environment, which posed challenges to the Company resulting in a 15.6% revenue decline. Our gross profit for fiscal 2024 decreased to approximately $3.1 million, reflecting a 14.7% decline, primarily due to lower sales volumes in intelligent pet products. However, we effectively reduced our selling expenses by approximately $1.3 million and general and administrative expenses by $2.0 million, enhancing our operational efficiency. As a result, our overall gross profit margin improved slightly to 21.0%, up from 20.8% in fiscal 2023."
"Looking ahead, we are committed to leveraging our strengths in traditional pet products to capture additional market share, particularly in international markets where we see significant growth potential. We are also exploring new product lines and enhancements to our intelligent pet products, aiming to align them with consumer trends and preferences. Our commitment to sustainability will drive our research and development efforts, focusing on eco-friendly materials and advanced technologies that resonate with our customer base."
"Thanks to these strategic initiatives, our net loss improved by approximately $1.4 million, or 18.8%, decreasing from $7.5 million in fiscal 2023 to $6.1 million in fiscal 2024. We appreciate the continued support of our stakeholders as we strive for sustainable growth and profitability in the coming years, which we believe will position Dogness as a leader in the pet products industry."
Financial Results for The Fiscal Year Ended June 30, 2024
Revenues
Revenues decreased by approximately $2.7 million, or 15.6%, to approximately $14.8 million in fiscal 2024 from approximately $17.6 million in fiscal 2023. The decrease in revenue was primarily attributable to an approximately $3.0 million decrease in the sales of intelligent pet products and an approximately $0.5 million decrease in the sales of climbing hooks and others, offset by an approximately $0.7 million increase in the sales of traditional pet products.
The breakdown of our revenue by products and services categories is as follows:
2024
| 2023
| Changes
| ||||||||
Products and services | Amount (USD Million) | Amount (USD Million) | % | |||||||
Products | ||||||||||
Traditional pet products | $ | 9.0 | $ | 8.3 | 8.7 | % | ||||
Intelligent pet products | 4.4 | 7.4 | (40.8) | % | ||||||
Climbing hooks and others | 1.4 | 1.8 | (25.0) | % | ||||||
Total revenue from products | 14.8 | 17.5 | (15.7) | % | ||||||
Services | ||||||||||
Dyeing services | 0.09 | - | - | % | ||||||
Other services | - | 0.07 | (100.0) | % | ||||||
Total revenue from services | 0.09 | 0.07 | 22.5 | % | ||||||
Total | $ | 14.8 | $ | 17.6 | (15.6) | % | ||||
Traditional Pet Products
Revenue from traditional pet products rose by approximately $0.7 million or 8.7%, from $8.3 million in fiscal 2023 to $9.0 million in fiscal 2024. This increase was primarily due to higher sales volume, with $1.2 million coming from overseas markets, offset by a $0.5 million decline in the Chinese domestic market.
Intelligent Pet Products
Revenue from intelligent pet products fell by approximately $3.0 million, or 40.8%, from $7.4 million in fiscal 2023 to $4.4 million in fiscal 2024. This decline was driven by a 33.1% drop in sales volume and a $2.3 decrease in average selling price per unit. The Chinese market accounted for a $0.8 million decrease, while overseas markets contributed to a $2.2 million decline, as the pet product industry is facing reduced consumer spending on non-essential intelligent pet products items.
Climbing Hooks and Others
Revenue from climbing hooks and other products decreased by approximately $0.5 million, or 25.0%, from $1.8 million in fiscal 2023 to $1.4 million in fiscal 2024, mainly due to lower sales volume.
Dyeing Services
The Company provides dyeing solutions using our manufacturing capabilities, applying dyes to textiles for desired quality and color. Revenue from dyeing services was $0.1 million in fiscal 2024, up from no revenue in 2023.
Sales to Related Parties
During fiscal 2024, Dogness Network Technology Co., Ltd. ("Dogness Network") and Dogness Technology Co., Ltd ("Dogness Technology") were related parties of the Company. Dogness Technology ceased being a related party after December 31, 2023. Sales to Dogness Network and Dogness Technology Co., Ltd totaled $0.1 million and $1.7 million in fiscal 2024 and 2023, respectively, representing 0.7% and 9.7% of total revenue. Costs associated with these sales were $0.1 million in 2024 and $1.2 million in 2023.
International vs. Domestic sales
Total international sales dropped by approximately $1.2 million, or 10.6% to approximately $10.1 million in fiscal 2024, primarily due to 48.7% decline in intelligent pet product sales. Traditional pet product sales, however, rose by 21.6%.
Domestic sales decreased by approximately $1.5 million, or 24.4% to around $4.8 million, driven by reduced customer orders caused by intense competition in the domestic market. Domestic sales of traditional and intelligent pet products declined by 19.8% and 27.7% respectively in the domestic market.
Cost of revenues
Cost of revenues decreased by approximately $2.2 million or 15.8%, from approximately $13.9 million in fiscal 2023 to approximately $11.7 million in fiscal 2024. The decreased cost of revenues was the result of the decrease in average unit cost due to a shift toward lower cost traditional pet products.
Gross profit
Gross profit decreased by approximately $0.5 million or 14.7%, from approximately $3.7 million in fiscal 2023 to approximately $3.1 million in fiscal 2024, primarily attributable to the decreased sales volume of our intelligent pet products. Overall gross profit margin was 21.0% in fiscal 2024, an increase of 0.2 percentage points, as compared to 20.8% in fiscal 2023.
The breakdown of gross profit by products and services categories is as follows:
For the Year ended June 30, | |||||||||||||||||||||
2024 | 2023 | Changes | |||||||||||||||||||
Products and services category | Amount ($Million) | Gross | Amount ($Million) | Gross | Gross profit Pct. | ||||||||||||||||
Traditional pet products | $ | 1.4 | 16.0 | % | $ | 1.2 | 14.3 | % | 1.7 | pct. | |||||||||||
Intelligent pet products | 1.2 | 28.3 | % | 1.8 | 24.4 | % | 3.9 | pct. | |||||||||||||
Climbing hooks and others | 0.5 | 34.9 | % | 0.6 | 34.2 | % | 0.7 | pct. | |||||||||||||
3.1 | 21.4 | % | 3.6 | 20.6 | % | 0.8 | pct. | ||||||||||||||
Services | |||||||||||||||||||||
Dyeing services | (0.03) | (35.8) | % | - | - | % | (35.8) | pct. | |||||||||||||
Other services | - | - | % | 0.06 | 86.5 | (86.5) | pct. | ||||||||||||||
Total | $ | 3.1 | 21.0 % | % | $ | 3.7 | 20.8 | % | 0.2 | pct. | |||||||||||
Traditional pet products
Gross profit for traditional pet products rose by approximately $0.3 million in fiscal 2024, with the gross profit margin increasing by 1.7 percentage points from 14.3% to 16.0%, mainly due to a $0.15 reduction in average unit cost.
Intelligent pet products
For intelligent pet products, gross profit fell by approximately $0.6 million from $1.8 million to $1.2 million, largely due to a 33.1% drop in sales volume. However, gross profit margin improved by 3.9 percentage points from 24.4% to 28.3%, driven by a $2.42 decrease in average unit cost.
Climbing hooks and others
Gross profit for climbing hooks and others decreased by approximately $0.1 million from $0.6 million to $0.5 million, primarily due to a 25.2% decline in sales volume. The overall gross margin for this category increased by 0.7 percentage points from 34.2% to 34.9%. The increase was due a $0.02 reduction in average unit cost.
Expenses
Selling Expenses
Selling expenses decreased by approximately $1.3 million, or 54.4%, from $2.5 million in fiscal 2023 to $1.1 million in fiscal 2024, mainly due to reduced marketing research activities. As a percentage of sales, these expenses were 7.6% in fiscal 2024, down from 14.1% in 2023.
General and Administrative Expenses
General and administrative expenses decreased by approximately $2.0 million, or 20.0%, from $9.8 million in fiscal 2023 to $7.8 million in fiscal 2024, due to lower professional consulting and decoration costs. As a percentage of sales, these expenses were 52.8% in 2024, compared to 55.7% in 2023.
Research and Development Expenses
Research and development expenses decreased by approximately $0.3 million, or 34.4%, from $0.9 million in fiscal 2023 to $0.6 million in fiscal 2024. As a percentage of sales, these expenses were 4.1% in 2024, down from 5.3% in 2023. The company anticipates an increase in R&D spending to focus on environmentally-friendly materials and new high-tech products.
Net loss
As a result of the foregoing, our net loss decreased by approximately $1.4 million or 18.8%, from approximately $7.5 million in fiscal 2023 to approximately $6.1 million in fiscal 2024.
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 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.
For investor and media inquiries, please contact:
Wealth Financial Services LLC
Connie Kang, Partner
Email: [email protected]
Tel: +86 1381 185 7742 (CN)
DOGNESS (INTERNATIONAL) CORPORATION | ||||||||
CONSOLIDATED BALANCE SHEETS | ||||||||
(All amounts in USD) | ||||||||
As of June 30, | As of June 30, | |||||||
2024 | 2023 | |||||||
ASSETS | ||||||||
CURRENT ASSETS | ||||||||
Cash and cash equivalents | $ | 6,956,434 | $ | 4,483,308 | ||||
Accounts receivable from third-party customers, net | 2,269,341 | 1,492,762 | ||||||
Accounts receivable from related parties | 582,182 | 1,272,384 | ||||||
Inventories, net | 3,119,827 | 2,679,275 | ||||||
Due from related parties | 97,037 | 87,430 | ||||||
Prepayments and other current assets | 3,328,189 | 3,748,955 | ||||||
Advances to supplier- related party | 50,908 | 239,729 | ||||||
Total current assets | 16,403,918 | 14,003,843 | ||||||
NON-CURRENT ASSETS | ||||||||
Property, plant and equipment, net | 61,303,327 | 61,686,849 | ||||||
Operating lease right-of-use lease assets | 16,325,988 | 17,537,096 | ||||||
Intangible assets, net | 1,780,856 | 1,845,006 | ||||||
Long-term investments in equity investees | 1,513,600 | 1,516,900 | ||||||
Deferred tax assets | 1,873,140 | 1,281,634 | ||||||
Total non-current assets | 82,796,911 | 83,867,485 | ||||||
TOTAL ASSETS | $ | 99,200,829 | $ | 97,871,328 | ||||
LIABILITIES AND EQUITY | ||||||||
CURRENT LIABILITIES | ||||||||
Short-term bank loans | $ | 894,400 | $ | 887,000 | ||||
Current portion of long-term bank loans | 759,339 | 2,959,918 | ||||||
Accounts payable | 1,286,981 | 895,694 | ||||||
Due to related parties | 518,003 | 85,843 | ||||||
Advances from customers | 264,832 | 121,687 | ||||||
Taxes payable | 1,007,482 | 1,015,444 | ||||||
Accrued expenses and other current liabilities | 1,452,225 | 1,026,218 | ||||||
Operating lease liabilities, current | 2,352,482 | 2,326,162 | ||||||
Total current liabilities | 8,535,744 | 9,317,966 | ||||||
NON-CURRENT LIABILITIES | ||||||||
Long-term bank loans | 3,315,715 | 1,595,549 | ||||||
Operating lease liabilities, non-current | 10,938,477 | 10,612,508 | ||||||
Total non-current liabilities | 14,254,192 | 12,208,057 | ||||||
TOTAL LIABILITIES | 22,789,936 | 21,526,023 | ||||||
Commitments and Contingencies (Note 10) | ||||||||
EQUITY | ||||||||
Class A Common shares, no par value, unlimited shares authorized; | 92,004,296 | 85,716,578 | ||||||
Class B Common shares, no par value, unlimited shares authorized; | 18,138 | 18,138 | ||||||
Statutory reserve | 291,443 | 291,443 | ||||||
(Accumulated deficit) retained earnings | (5,391,709) | 664,004 | ||||||
Accumulated other comprehensive loss | (10,511,317) | (10,345,832) | ||||||
Equity attributable to owners of the Company | 76,410,851 | 76,344,331 | ||||||
Non-controlling interest | 42 | 974 | ||||||
Total equity | 76,410,893 | 76,345,305 | ||||||
TOTAL LIABILITIES AND EQUITY | $ | 99,200,829 | $ | 97,871,328 | ||||
DOGNESS (INTERNATIONAL) CORPORATION | ||||||||||||
STATEMENTS OF (LOSS) INCOME AND COMPREHENSIVE (LOSS) INCOME | ||||||||||||
(All amounts in USD) | ||||||||||||
For the Years Ended June 30, | ||||||||||||
2024 | 2023 | 2022 | ||||||||||
Revenues - third party customers | $ | 14,746,447 | $ | 15,884,281 | $ | 24,882,618 | ||||||
Revenues - related parties | 101,455 | 1,700,173 | 2,212,579 | |||||||||
Total Revenues | 14,847,902 | 17,584,454 | 27,095,197 | |||||||||
Cost of revenues - third party customers | (11,642,233) | (12,760,852) | (15,654,952) | |||||||||
Cost of revenues - related parties | (82,955) | (1,162,314) | (1,301,180) | |||||||||
Total cost of revenues | (11,725,188) | (13,923,166) | (16,956,132) | |||||||||
Gross Profit | 3,122,714 | 3,661,288 | 10,139,065 | |||||||||
Operating expenses: | ||||||||||||
Selling expenses | 1,129,671 | 2,478,163 | 2,077,174 | |||||||||
General and administrative expenses | 7,838,024 | 9,800,714 | 6,742,687 | |||||||||
Research and development expenses | 610,439 | 931,078 | 917,227 | |||||||||
Loss from disposal of property, plant and | 1,075,490 | 15,306 | 327,921 | |||||||||
Total operating expenses | 10,653,624 | 13,225,261 | 10,065,009 | |||||||||
(Loss) income from operations | (7,530,910) | (9,563,973) | 74,056 | |||||||||
Other income: | ||||||||||||
Interest expense, net | (207,410) | (330,824) | (370,108) | |||||||||
Foreign exchange transaction gain | 310,860 | 800,403 | 246,211 | |||||||||
Other income, net | 541,468 | 112,109 | 115,016 | |||||||||
Rental income from related parties, net | 337,743 | 295,362 | 173,089 | |||||||||
Total other income | 982,661 | 877,050 | 164,208 | |||||||||
(Loss) income before income taxes | (6,548,249) | (8,686,923) | 238,264 | |||||||||
Income taxes benefit | (491,600) | (1,227,449) | (2,777,868) | |||||||||
Net (loss) income | (6,056,649) | (7,459,474) | 3,016,132 | |||||||||
Less: net loss attributable to non-controlling | (936) | (259,211) | (219,427) | |||||||||
Net (loss) income attributable to Dogness | (6,055,713) | (7,200,263) | 3,235,559 | |||||||||
Other comprehensive loss: | ||||||||||||
Foreign currency translation loss | (165,481) | (6,204,254) | (3,203,448) | |||||||||
Comprehensive loss | (6,222,130) | (13,663,728) | (187,316) | |||||||||
Less: comprehensive loss attributable to non- | (932) | (270,210) | (230,583) | |||||||||
Comprehensive (loss) income attributable | $ | (6,221,198) | $ | (13,393,518) | $ | 43,267 | ||||||
(Loss) earnings per share | ||||||||||||
Basic | $ | (0.55) | $ | (0.68) | $ | 0.31 | ||||||
Diluted | $ | (0.55) | $ | (0.68) | $ | 0.31 | ||||||
Weighted Average Shares Outstanding* | ||||||||||||
Basic | 10,919,386 | 10,598,989 | 10,301,133 | |||||||||
Diluted | 10,919,386 | 10,598,989 | 10,316,232 | |||||||||
DOGNESS (INTERNATIONAL) CORPORATION | ||||||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||||
(All amounts in USD) | ||||||||||||
For the Years Ended June 30, | ||||||||||||
2024 | 2023 | 2022 | ||||||||||
Cash flows from operating activities: | ||||||||||||
Net (loss) income | $ | (6,056,649) | $ | (7,459,474) | $ | 3,016,132 | ||||||
Adjustments to reconcile net (loss) income to | ||||||||||||
Amortization of operating lease right-of-use | 1,179,776 | 1,023,500 | 408,566 | |||||||||
Depreciation and amortization | 2,771,727 | 3,315,172 | 3,458,347 | |||||||||
Loss from disposition of property, plant and | 1,075,490 | 15,306 | 327,921 | |||||||||
Share-based compensation for services | 1,114,857 | 1,243,385 | 11,831 | |||||||||
Change in inventory reserve | - | 246,281 | - | |||||||||
Change in credit losses | 275,923 | 160,254 | (16,776) | |||||||||
Deferred tax benefit | (597,241) | (658,595) | (118,424) | |||||||||
Warrants modification | 239,308 | - | - | |||||||||
Accrued interest income | - | - | (1,320) | |||||||||
Changes in operating assets and liabilities: | ||||||||||||
Accounts receivables | (1,060,171) | (109,090) | 683,119 | |||||||||
Accounts receivables-related parties | 691,431 | (272,301) | (620,728) | |||||||||
Inventories | (447,631) | 268,593 | 740,265 | |||||||||
Prepayments and other current assets | 97,647 | (3,113,841) | 1,173,662 | |||||||||
Advances to supplier- related party | 189,395 | (249,986) | - | |||||||||
Accounts payables | 395,559 | (62,237) | 224,676 | |||||||||
Accounts payables-related parties | - | (379,124) | 58,190 | |||||||||
Advance from customers | 144,236 | (18,989) | (52,365) | |||||||||
Taxes payable | (5,936) | (441,390) | (2,827,106) | |||||||||
Accrued expenses and other liabilities | 423,456 | 34,381 | (137,457) | |||||||||
Operating lease liabilities | 382,649 | (2,444,110) | (168,075) | |||||||||
Net cash provided by (used in) operating | 813,826 | (8,902,265) | 6,160,458 | |||||||||
Cash flows from investing activities: | ||||||||||||
Purchase of property, plant and equipment | (3,524,713) | (1,520,556) | (15,259,272) | |||||||||
Proceeds from disposition of property, plant | 79,850 | 14,872 | 22,213 | |||||||||
Proceeds upon maturity of short-term | - | 50,330 | 495,680 | |||||||||
Net cash used in investing activities | (3,444,863) | (1,455,354) | (14,741,379) | |||||||||
Cash flows from financing activities: | ||||||||||||
Net proceeds from private placement | 4,920,800 | - | 19,124,920 | |||||||||
Adjustment relating to non-controlling | - | (26,245) | - | |||||||||
Net proceeds from exercise of warrants | 329,480 | - | 4,444,136 | |||||||||
Reverse split shares | (810) | - | - | |||||||||
Net proceeds from exercise of options | - | - | 180,000 | |||||||||
Proceeds from short-term bank loans | 899,600 | 483,000 | 804,000 | |||||||||
Repayment of short-term bank loans | (887,000) | (160,000) | (944,446) | |||||||||
Proceeds from long-term bank loan | 2,629,600 | - | - | |||||||||
Repayment of long-term bank loans | (3,102,838) | (1,337,323) | (796,416) | |||||||||
Proceeds from (repayment of) related party | 425,007 | (25,796) | (1,943,408) | |||||||||
Net cash provided by (used in) financing | 5,213,839 | (1,066,364) | 20,868,786 | |||||||||
Effect of exchange rate changes on cash and | (109,676) | (698,581) | (617,747) | |||||||||
Net increase (decrease) in cash and cash | 2,473,126 | (12,122,564) | 11,670,118 | |||||||||
Cash and cash equivalents, beginning of year | 4,483,308 | 16,605,872 | 4,935,754 | |||||||||
Cash and cash equivalents, end of year | $ | 6,956,434 | $ | 4,483,308 | $ | 16,605,872 | ||||||
SUPPLEMENTAL DISCLOSURES OF | ||||||||||||
Cash (refunded) paid for income tax | $ | - | $ | (2,593) | $ | 3,195 | ||||||
Cash paid for interest | $ | 294,628 | $ | 396,517 | $ | 471,443 | ||||||
Non-Cash Investing Activities | ||||||||||||
Transfer from construction-in-progress to | $ | - | $ | - | $ | 597,594 | ||||||
Additions (reductions) to property, plant and | $ | 7,301 | $ | (8,167) | $ | - | ||||||
Prepaid share-based compensation for | $ | - | $ | 315,917 | $ | - | ||||||
SOURCE Dogness (International) Corporation
