PETS - Earnings call transcript Q3 2017

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Operator

Welcome to the PetMed Express Incorporated d/b/a 1-800-PetMeds conference call to review the financial results for the third fiscal quarter ended on December 31, 2017. At the request of the company, this conference call is being recorded. Founded in 1996, 1-800-PetMeds is America's largest pet pharmacy, delivering prescription and non-prescription pets medication and other health products for dogs and cats direct to the customer. 1-800-PetMeds markets its products through the national advertising campaigns, which direct our consumers to order by phone or on the Internet, aimed to increase the recognition of PetMed family of brand names. 1-800-PetMeds provides an attractive alternative for obtaining pet medication in terms of convenience, price, ease of ordering and rapid home delivery. would Chief turn Financial I to call time, company's the Officer, this like the to over At Bruce Rosenbloom. ahead. go Please

Bruce Rosenbloom

Thank welcome to would today. I everybody you. here like

President forward-looking Also, certain call Actual statements information Act press statements to which currently like our information everyone to assumptions. materially will different that vary statements question-and-answer risks will that within of Mendo included Before the be of be I this include may or the on assumptions portion of remind current Securities results Reform call. statements. over be events and future first of uncertainties. based views as by significantly will or well implied conference cause these future be the uncertainties conference these of turn results, Executive and Officer, that later the that Akdag, or our in Private I session, available our the this and have involve the as number a future and achievements used listen-only Chief from upon performance factors may concerning risks, reflect we These would Exchange the to these the on a statements or Litigation actual based meaning the call Commission are in us. Securities involve may until Because based beliefs may expressed number events, results XXXX

Exchange factors other with our recent and most identified filings various in risk and Securities annual We with associated operations our have the report Commission.

Executive Mendo Akdag, Officer introduce today's of President our let speaker, and me Chief X-XXX-PetMeds. Now,

Mendo Akdag

ended highlights months XX, compare you and everyone for and last nine review we us. XXXX. nine on fiscal quarter results. our ended We'll December Welcome XX, months on to financial and year's will our XXXX joining Bruce. quarter you, of Today, third thank Thank the December

million of $XX.X December of million XX, compared the increase ended for $XX.X were XXXX, period For the our XX.X%. sales fiscal on quarter an same to the third sales year, prior

ended months $XX due million were nine was the same were prior-year. last compared The the the average quarter an in increases order sales and sales increases to the December new $XXX.X quarter for compared The the nine in of year, to value XX.X%. months to on increase XXXX, for order XX, for of approximately reorder million For sales. $XX $XXX.X sales the

or an same million XX%. diluted For to fiscal million increase $X.XX the prior-year, compared was $X.XX third net quarter net per or the to income quarter, the for share $X.X income share of $X.X diluted per

For the ago, nine share months, net to income million income million of income increase $X.XX per or to year share gross to due profit margins. mainly was or $X.XX higher accelerated to $XX.X per an net net diluted was XX%. The $XX.X diluted increase compared a

In by $X.X helped addition, or earnings share. new million tax the boost approximately $X.XX law our for the per quarter, diluted

the increased New to $X.X order million compared XX.X% sales by year. for million quarter for period the same the to prior $X.X

for million order sales months, million $XX.X to $XX.X Reorder of million increased the XX.X% the last sales sales new for by to increased million XX.X% compared same for quarter the For quarter $XX the by to the reorder to the period prior-year. same compared nine year. $XX.X

customers ago. the for compared XX,XXX to approximately XXX,XXX months, the for nine the And $XXX.X the XXX,XXX period to period new for by compared same For approximately $XXX.X in million We reorder the the nine months new a to third acquired acquired our the increased XXX,XXX XX.X% compared year year to sales ago. quarter million period same customers fiscal in a prior-year. same we

XX% our sales increase of proportion were resulted winter same the quarter the to sales. our due is for which the approximately of website the peak being XX% compared a last The year, XX% our quarter, generated business with in For mix. on in to considered and off-season. and flea, heartworm tick seasons, are product full-on summer in medications our Spring in seasonality online

For of was a XX.X% same to year compared quarter, percent as ago. sales third gross the for a profit XX.X% fiscal the period our

gross the higher For XX.X% to generation was quarters, three as in profit a we the the the prior seen shift to nine trend December quarter. months in percent medications the months, year for our ago. The compared XX.X% sales of nine in a have new with continued sales margin,

was administrative ago. and nine We the sales G&A X.X% the to compared for was it same increased were with able the general for quarter months, sales. leverage expenses percent X.X% And to X.X% of period for Our as XX.X% for quarter the compared to the prior-year. a same year the a

quarter, For $X.X the to XX%. advertising $X.X same increase prior-year, for in spent the quarter million compared the we an of million

year. of the for XXXX, review. $XX.X financial new questions. a $XX months, acquiring to the to a the and mainly advertising advertising months $XX XX% And the order quarter XX%. act rate effective operations next cost tax The for equivalents was and it ready we're increase of from million million tax due increases Advertising million the fiscal nine We to Due cash debt no year. nine in to the anticipating $XX.X in the approximately an had nine For year of to nine million income we're XXXX. to same compared we $XX compared the nine was March $XX with for the of the million take million stimulate customer of as months compared the for nine months prior-year. $XX.X Operator, in months, Net XX, is $XX to the the last We increased advertising for for of XX% prior-year. ends of months cash for cost. approximately an December spent sales. compared $XX.X quarter This $XX.X increase for to and inventory, cash reform for was XXXX ago, for the

Operator

Instructions]. [Operator

open. is question Our Craig-Hallum. Ellich is Kevin from Mr. from first your coming Kevin, now line

Kevin Ellich

I with just start you. I to off Mendo, wanted morning, gross guess, Thank the margin. guys. Good

gross should these Another XXX, doesn't thinking quarter? like each basis we the start seasonality seem going XXX XXX, points but quarter. really strong continue seeing It margins by that to much we're are expand days, in business

Mendo Akdag

off-peak gross season and margins higher the our off-peak peak typically in season. We're season than are in

to comparisons get as are along. the So, we go going tougher

So, basis our gross year. guess, margins increased last in the I quarters, for points, like, four XXX the

So, continue it be to tougher going will that forward.

Kevin Ellich

of off-season, has next true? would seeing it. that generation in terms continued. the much say as or not Got I sales generation new that's the products, of trend think but you in Would the you're

Mendo Akdag

sales topicals to the and category, low-margin really higher tick yes. profit increasing In and shift next-generation the medications, there gross margin, is correct, That flea in reason that's margins. for is main a from the

Kevin Ellich

this makes Okay. to this higher advertising expense. quarter. costs you sense. trend customer is up going about Do was acquisition Yup, I that XX% think reason continue? think you that And gave being then, the

Mendo Akdag

a impression. increase Yes. cost There per is

that there going would some increase anticipate compared year. I last So, is be to the to

Kevin Ellich

Okay, great. And Obviously, explain next was tax then, one happened? I that calendar in benefit all to what the Bruce. How quick year, down guess, come this the for we're rate but quarter? one expecting can you

Bruce Rosenbloom

Sure.

six rate. What was Once half full you been As were XX% a first we're quarters. law the a allowed of applying the for been first the has we XX% for we federal tax prorate taxpayer. have that enacted, year, rate the know, to

then XX% apply is we'll at going year prorated a of of rate to nine had months March XX.X%. one XX, months quarter. ends fourth to the full that which at and for federal be Once the XXXX, moving month a XX%, we that our able federal apply XXXX XX%, forward to We're year So, nine that's the fiscal rate. fiscal for

Kevin Ellich

Okay. use XXXX, fiscal XX%. But you us want for to

Bruce Rosenbloom

Right. That's well. as rate effective tax the state that blended includes

Kevin Ellich

great. Okay,

Mendo Akdag

That Yes. income includes state tax.

Kevin Ellich

competitive or the for changes other increased competition in me. seeing retailers? the last One online dynamics of from you Okay. one any Are any

Mendo Akdag

That's in It's similar It's little I is the, reasons one impacting a cost advertising. cost the our two up prior of in would the quarters. advertising to bit. say,

Kevin Ellich

Thanks, guys. great. Okay,

Operator

Our next from now line coming Wright from question is open. your Suisse. is Credit Erin, Erin

Erin Wright

third-party your portfolio? any been vendor diverse to would direct a, with establish anything greater have able How of Thanks. thanks. as I more access well changed the guess, you that to I current you guess, relationship relationship? your sort Has manufacturer on front with relationship to side? meaningfully any a distributors direct on Great, facilitate characterize

Mendo Akdag

good, Our There say. with some may we our disclose but are happening, I would May. that changes is relationships vendors XX-K in very our in

Erin Wright

third-party or direct relates distribution relationships? manufacturer to Changes as it

Mendo Akdag

Direct relationships.

Erin Wright

Okay, thanks.

Bruce Rosenbloom

far carry access products, as a pet the As popular most we to full of medications. all line

So, access isn't necessarily the issue.

just about direct relationships. You're more talking

Erin Wright

since come strategy response thanks. has of advertising Right, is has up sort market it spend changed a competitive I just the your okay. point? Great, this at to advertising in anything the of sort guess, or

Mendo Akdag

afford higher pay to With a we more can customer. to margins, acquire

the to changed little have a due thresholds our So, high margins. bit

Erin Wright

but today, tax on impact Thanks. the deployment I your think then, how this we overall? guess, hike reform, will how capital I should dividend priorities see And

Mendo Akdag

far in infrastructure our far But at we stage deployment as as is as business, look as capital course concerned. opportunities. maintenance do during of We're now normal concerned, is so

So, hear will you if guys something about it. obviously, happens,

Erin Wright

Do or you opportunities pipeline out an standpoint? there anticipate will there? you active that Are from M&A be

Mendo Akdag

I say I course wouldn't call that. will it during looked business, always we normal do just and at active. an to would continue of opportunities

Erin Wright

you. Thank Okay, great.

Mendo Akdag

welcome. You're

Operator

Instructions]. [Operator

Sidoti Our Lebiedzinski Anthony from open. your Company. next from is coming & now is Anthony, question line

Anthony Lebiedzinski

morning. Good you questions. the for thank And you. Thank taking

that to of customers towards sense, of next you've your higher-margin percentage to the shift obviously, any made generation have have few quarters medications. So, a very the next shift you positive medications? as generation already had Do Mendo, what

Mendo Akdag

have some you. do to I'm share going that sense, We with but not

another the will So, I for probably couple continue shift years. think of

Anthony Lebiedzinski

of easier are sort mobile to to coming Thanks was are of there even I any you and great. could to for that could from And that app it wondering improvements sales much planned any to Okay, customers your your sense order? make perhaps the as color. app how if

Mendo Akdag

the the more we We're still next working – live, weeks. in be not believe, go the phone, consumer the six the growing, the important but app, as the it's and think which for of on should it's more within infancy. second-generation to it's But mobile future. using still I going It's of

Anthony Lebiedzinski

it. Got

much. very Thanks Okay.

Operator

the in like this over time. I show no hand further Go We queue ahead. at to call the would questions to speakers.

Mendo Akdag

you. Thank

increasing of up the continue This this remainder conference us. to focusing today's you on XXXX, joining for Operator, service call. and ends sales improving conference the call. wraps levels. For fiscal our we'll Thank

Operator

Thank concludes And for conference. you participating. today's that

now may You disconnect.

PetMed Express (PETS) 22 Jan 182017 Q3 Earnings call transcript