Executive Summary:
LP4 Dogtown Pet Spa is a rapidly growing pet care company operating in Utah. We offer boarding, daycare, training, and grooming services in world-class facilities. Since our founding in 2019, we have achieved significant growth and established ourselves as a leader in the industry. We are seeking additional funding to support our continued expansion. Specifically, we are looking to refinance existing debt and acquire new facilities over the next 5 years. We believe that with additional capital, we can further solidify our position as the premier pet care provider in the region.
Background:
We founded LP4 Enterprises LLC in 2019 to acquire, build, and develop companies that would grow into word class organizations. Our focus is on acquiring companies that can’t be offshored and won’t lose relevance at the hands of developing technology. This allows us to leverage our 40+ years of operational excellence, consulting, and industry leadership experience to grow world class organizations.
Our goal from the beginning was to develop or purchase 5-10 facilities around the country in 10 years. Each facility is expected to follow a model of continuous improvement and growth. This model provides employees with the opportunity to develop a skillset that allows for a salary of $70k a year without obtaining a college degree. We are developing a company culture in accordance with the following values: Safety, Integrity, Respect People, Teamwork, Continuous Improvement, Growth, and Results.
Our first purchase was Dogtown Kennels in Sandy, Utah in April 2019. Following the purchase of our second location in St. George, UT in December 2019, we rebranded our organization to LP4 Dogtown Pet Spa. We invested $250k into both facilities to elevate them to industry leading standards. We also expanded our areas of specialty to include dog training and grooming services in addition to the previously established pet daycare and boarding services.
South Jordan Facility:
We started looking to expand at the end of 2021 following the COVID-19 Pandemic. We began looking for a second location on the southwest side of Salt Lake Valley, as this area has seen tremendous growth. We struggled to find a facility that would lease to a business in the pet care industry, which led us to the purchase of a new building in South Jordan/ Daybreak area. This site was designed to become the flagship location for all our facilities.
The building process took was far more time consuming than expected, which was largely attributed to mistakes and miscalculations on behalf of the builder’s superintendent. Despite the eventual termination of the superintendent, we were unable to open the facility until October of 2022, four months behind schedule and $350K over budget.
Leadership Team:
The opening of this new flagship facility corresponded with the restructuring of company leadership. This restructuring further catered to our vision of creating inspired and motivated people who provide a safe, enjoyable, and valuable experience for each pet, pet owner and team member. Our core values of safety, integrity, respect, teamwork, continuous improvement, growth, and results have fueled our success and earned us numerous awards, including 4x Gold (Best) Pet Boarding & Daycare Facility in Southern Utah and recognition as one of Utah's 100 Companies Championing Women. Our leadership development plan paired with various Kaizen Improvement Events has enabled our leadership team to successfully implement tremendous improvements in the last 12 months. Our sales grew in 2023 despite a 20% drop in the number of dogs per day in both Sandy & St. George as a result of economic factors.
Growth Story:
The following represents sales growth over the last five years:
In conjunction with sales growth, the restructuring of leadership allowed us to reduce our payroll costs by 12.6% and management costs by 48% in 2023 from 2022:
Compared to 2021 to 2022 where a 20% increase occurred:
In our first three years of operation, we invested roughly $350k to transition the old brownfield sites we purchased into the high-end, spa-like facilities we now have. Our EBITDA for the last five years has been low, as we expanded and upgraded our facilities. Here are EBITDA numbers:
Partnership Opportunity:
The opening of the new South Jordan site has presented cash flow issues as we navigate the acquisition of new customers and rising interest rates.
· Our adjustable-rate SBA loan interest rate has risen from 5.5% to 10.75%. As a result, our loan has gone from $14,000 a month to $22,000 a month in one year.
· Mistakes and miscalculations on behalf of other parties throughout the building process forced us to obtain a second loan with the builder (AK Capital).
The following information provides greater detail pertaining to these loans:
1st – Celtic Bank
Current Loan Amount Interest Rate Term in Months Left Monthly Payment
$2,284,803.54 10.75% 285 $22,211.31
2nd – AK Capital
Loan Amount Interest Rate Term in Months left Monthly Payment
$241,149.32 12.50% 39 $7,556.00
In summary, we are seeking a buyer to purchase the South Jordan building and lease it back to us on a 10-year lease.
· Total sales price would be $2,525,957.71 with all closing costs paid by the buyer.
We have a current appraisal on the building of $2,600,000. We deeply wished to keep the building, but we must lower our costs for cash flow.
We propose a lease rate of $1.25 to 1.40Triple Net:
· The building is 9000 sq. ft., resulting in a lease payment of $11,250 to 12,600 a month.
We are currently refinancing our other debt into a longer-term payment that will enable us to conserve cash flow in order to grow our business in the next 2-3 years. We are planning to open or acquire two to three new facilities in the next 5 years. We currently have the following debt structure:
· Short Term Loans: $415,000 due 12-48 months
Benefits of Partnership:
· Strong brand and reputation: Partner with a proven company with a loyal customer base and a commitment to excellence.
· High-quality asset: Acquire a recently constructed, modern facility with significant growth potential.
· Experienced management: Benefit from the expertise of our established leadership team.
· Stable cash flow: Enjoy the security of a long-term lease with a reputable tenant.
Moving Forward:
We are confident that a partnership with LP4 Enterprises LLC presents a unique and mutually beneficial opportunity. Please feel free to reach out to me with any questions.
Larry Hamilton CEO