PETS - Earnings call transcript Q1 2020

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Operator

Welcome to the PetMed Express Incorporated doing business as 1800PetMeds Conference Call to review the Financial Results for the First Fiscal Quarter Ended on June 30, 2020. At the request of the Company, this conference is being recorded. Founded in 1996, 1800PetMeds is America’s largest pet pharmacy, delivering prescription and non-prescription pet medications and other health products for dogs, cats, and horses direct to the consumer. 1800PetMeds markets its products through national advertising campaigns, which direct consumers to order by phone or on the Internet and aims to increase the recognition of the PetMed’s family of brand names. 1800PetMeds 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 Mr. Bruce Rosenbloom. Mr. Rosenbloom, please go ahead.

Bruce Rosenbloom

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

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

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

Chief Mendo the and Mendo? Officer introduce Executive of speaker, me XXXXPetMeds. today’s Akdag, let Now, President

Mendo Akdag

us. joining for you thank and Welcome Bruce. you, Thank

to owners be strong shifting continued During this their ecommerce, for to June with quarter, demand pet online. purchases consumer

peak coinciding due increased demand, season. positively to been impacted with have sales Our this our

business, operations. our we been As our any without business normal material an disruptions in during hours open essential have

taken We safety measures our health and the to of also ensure have employees.

the our and not where supply working any material implemented have home we in have our disruptions temporarily from as we increased a seen so, precaution, Also of inventory far enhanced have possible quarter. chain. during disinfection But We workplace. our

compare to last year’s quarter our on Now, June June first ended we’ll fiscal quarter on XXXX. XX, ended XX, XXXX

first for sales. of period the year, XX%. fiscal same million ended the June million in an sales sales reorder $XX compared increases $XX.X The XX, XXXX, to the increase was For prior sales in quarter order increase due to on and of were

order for the average quarter to approximately Our last quarter was $XX the for $XX year. compared value same

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

In impacted addition earnings. improvement sales margin positively operating X.X% growth, of income to

New proportion for Reorder being XX% for mix. fall by to our of XXX,XXX to million sales $XX.X and new prior summer off-season. medications compared order compared increased approximately million of quarter for sales quarter million the the by same sales quarter million the $XX.X for same for year. prior acquired $XX.X We $XX.X year. quarter to last to XX% compared increased the the your the reorder first the due our in seasons the are and the peak Spring winter year. our XXX,XXX same is flea, fiscal in to customers in quarter with Seasonality and considered product to business period tick heartworm

of Advertising as the had advertising quarter, expenses. by expenses ago, additional ago, expenses customers increase $XXX,XXX of and The XX% improvement. to compared requiring for payroll, $XX.X included prior quarter increase points defined $XX quarter inventory fees bank for increased X%. a cash million XX.X% ready We price. operations to by no of in $XX.X a to result COVID-XX, was in of financial review. for majority year increase quarter, quarter The to for negatively compared for the a from divided was the normal in basis we’re service shortages This take the by as XX General a percent million quarters. impacted due an cash and We Operator, improvement. of expenses same as payroll as future administrative by same $XXX,XXX and to approximately a for were June $X.X period fiscal cost in customer compared the related million sales possible profit incurred million in the the an with quarter to this of to stock sanitation telephone million increased which year, increased equivalents For as advertising and $XX intend same was telephone return quarter. to about questions. the precaution due XX, XX.X% the XXXX. a expenses. was approximately acquired levels Stock-related $X.X ends new COVID-XX. total expenses, and approximately inventory a Cash debt a total a for first We gross increased inventory year spent increased due of $XX.X $X our compensation the million to to

Operator

Thank you.

[Operator We first now Sidoti go Anthony Instructions] of please will Company. & begin comes from Lebiedzinski ahead. the The question Sir, question-and-answer session.

Anthony Lebiedzinski

thank for and morning taking Good the you questions.

of part far the as in So, sales as increase sales increase the AOV. an increase, was

drove you value? increase maybe in expand if what Mendo, perhaps, the So, average order could on

Mendo Akdag

upselling and encouraged crossselling. have campaigns Our

So, the was for the reason increase. that

Anthony Lebiedzinski

was And really down okay. as far sequentially the from ago, it, as year the three gross the from but margin, Got up a quarters. last obviously it

the quarters. last were tracking XX% above couple You of

So, that? downtick driving just on gross the or you expand you margin? else is sequential seeing Are something more in competition can is the it

Mendo Akdag

reorders more credit Product margins. that margins. loyalty higher different. lower very caused that has sales were accruals, strong program in had was Also impacted negatively around We quarter gross the over-the-counter Sure. which mix

Anthony Lebiedzinski

And last Okay, great. me. Thank you for that. question then, for

or the far was you as product as any increases? increased, on there As focused across this as board inventory certain inventory categories far the were as your

Mendo Akdag

We we in. quarter inventory. increased intend that the we to to starting this levels movers inventory were return are Fast that normal the in ones

Operator

comes Road next question of Rose Battle Our Instructions] Ben from Research. [Operator

Ben Rose

So, number, mind? sales if the know have could come across don’t I wire. that you But, actual new you don’t order the results the repeat

Mendo Akdag

Sure.

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

Ben Rose

in Was new medications, in maybe advertising dramatic for was over-the-counter obviously away, the sales the you’ve just sales. speak far the percentage it been in order sales trending a is up, the change to you’re a new have on Could that this to such shift new what perhaps customers? out accounts it and this order a or just So, focus to by had largest way shift? moment. reaching or Reorder increase but part for you to

Mendo Akdag

ecommerce peak our strong Demand for that and has with coincided been season.

demand helped that was strong, in Advertising pricing advertised more we was orders. new So, Also, -- said. favorable quarter advertising and more the I as was our effective.

Ben Rose

Okay.

Just think sustain the I year next last half. or is to part and quarters, general be over looking kind share in the What out its what of due may in is market general on so, seen and crisis? a PetMeds gains you’ve that of investors of the year couple perhaps sense, mind extend the many a to the now for plan for

Mendo Akdag

year. artificial we’re optimize the intelligence our also and to fiscal websites experience. using mobile for app this advertising and user is Personalization redesigning working the focus and on Continued

Ben Rose

it that get the one pricing more offering inventory there to may the or And manufacturers was of needed? were that if for build, sort were with for favorable I drug perhaps you you Bruce, Okay. normal just terms the inventory some

Bruce Rosenbloom

inventory of the allows I Obviously, receive, up stocking volume for us us inventory. it So, normal increased more on down pricing, for part to levels was better it most increased higher hitting to road. was sales, really I reaction a hit to rebates the guess guess, demand and requirements

Operator

[Operator Instructions] Research. Ace is question of The Ellich from next Kevin

Kevin Ellich

Mendo. Hey,

what OTC off, increase more First or think there with was this fewer it do vet sales that cited, visits, led is with promotions quarter were and you the drove specific the increase? coronavirus to over-the-counter to you mix that that maybe

Mendo Akdag

yes. some them of Probably veterinarian offices, are The closed.

shifted the were from that to brick closed. mortar So, prescription and retailers OTC; also sales

Kevin Ellich

the on in costs you that, that the top $X year-over-year, sense. though is can’t acquisition sales, or even the was -- a saw of remember the of trend percent going customer if not? year? that target K That I is to as advertising new Okay. then, makes a with And continue? X% lower I spend, or do think million And for

Mendo Akdag

percent availability and advertising in budgeted we more or X% year. believe XX-K, the on from favorable not We the is have a the It’s for pricing going as I if depending to than year. quarter-to-quarter, us. to last fluctuate

be peak more we’ll is when during demand So, stronger. season aggressive

we’ll see happens. what So,

Kevin Ellich

sense. makes remind spending on right? Have That And primarily Got TV campaigns? launched any online new you’re you me, it. advertising,

Mendo Akdag

a have spent on The do being money of it’s is majority small. but online digital. the the campaign, We TV

Kevin Ellich

ecommerce retailers online landscape? any in competition of channel clearly, competitive increase the other trying a Have couple the we big maybe as in from saw of And years you then platforms. well seen lastly, to their the vet coming last as lot change

Mendo Akdag

was very online the markets Online opportunity majority And have anticipate we continuing stabilized Veterinarians market the prescription prices of share really share channel. in still market with to manufacturers on that’s enforcing And the MAP competitive. the medications. shift direct-to-consumer policies.

Kevin Ellich

With well any changes you inventory consolidation last seen have that’s in one then, And any happened, the some coronavirus one issues for chain? the and supply as with me. as industry large

Mendo Akdag

my any not quarter. we the presentation. inventory, as with precaution, in as chain the have increased our We issues in did included But, a supply June I

Operator

Thank you.

Lebiedzinski, Sidoti & come Our last question will for Anthony Company. today from

Anthony Lebiedzinski

follow-up one Just question.

about curious presidential election for so, expectations impact advertising? As up, advertise? far far ability you if so for And advertising talk just that to coming any the as have your as about as your expenses, will costs think maybe

Mendo Akdag

in and television starting on minimally advertising will We’re stop on August. advertising television we

impact some probably have mostly It So, on will it digital. television. may impact

slightly prices on the input my that’s But, be So, higher. may that.

Operator

I over Akdag. will turn call Mendo this time, to the At

Mendo Akdag

and call. the optimize us. call. This focusing today’s Operator, on you this wraps to mobile conference up digital experience. Thank our In ends Thank redesigning XXXX, fiscal conference you. website app our for customers’ we’re joining

Operator

you participation At parties may Thank disconnect. this conference all all your call. time, on today’s for

PetMed Express (PETS) 20 Jul 202020 Q1 Earnings call transcript