Earnings call transcript Q1 2024

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Operator

Good afternoon, everyone, and thank you for joining the PetMed Express First Quarter Earnings Conference Call. My name is Camilla, and I will be the operator for today's call.

I would now like to pass the conference over to our host, Mr. Brian Prenoveau with Investor Relations. Sir, the floor is now yours.

Brian Prenoveau

operator. you, Thank like PetMed would everybody today here And fiscal to first the Express quarter to I welcome earnings call. like conference listen-only I portion in the which also to that later everyone would the will of be this the call until be call. will question-and-answer session, remind first XXXX, call Exchange XXXX of amended, certain Securities the and as Also, this Litigation that Act and statements a forward-looking Reform risks be will include information of the Private and Securities within of during Act involve of may included may the that meaning number uncertainties.

or our These no upon risks, may statements be or us. no business required including are update condition this respect forward-looking by to as operations any other the will should matter, uncertainties on these assurance in PetMed. results regulation, could and views be Nothing concerning events, from based PetMed assumptions based upon results of occur subsequent current or of be available law, statements matter future publicly representation is our on authority. as or or we as as any or relied based have assumptions. projected. obligation to presentation Actual information future reflect in to currently There materially can warranty beliefs except used that differ events, involve undertakes a applicable financial as be statements competent legal realized. those forward-looking statements these any Because well these contained

Securities most today's Commission. non-GAAP during to issued have in this more with report measures our one other measures. non-GAAP our Exchange operations discussing in Reconciliations identified most afternoon. Also, the the of be we associated the financial these comparable financial release annual included various of and are call, will GAAP with press course We recent filings the the or measures directly factors risk and company

Matt? Matt me Now, and CEO introduce President, our Hulett. let

Matt Hulett

today the achievements time earnings making forward Thank community. our financial analysts' you, We're looking and Brian. sharing for to to with call. our investment participate and Thank the you in advancements operational

of during our May First, overview achieved the offer and an developments period. milestones will XX, we significant insights will business update provide this last into progress XXXX. on our This since

will results, Second, a financial detailed provide summary quarterly of our we a performance. of including our financial analysis

PetMed is a to and medications, direct and services the company non-prescription consumer. that supplements, delivers food, prescription vet supplies

pharmacy parents million have Our an we XX established as trusted by than company's served expert is and over brand pet evidenced the fact more operating history. our online XX-year that

customer believe value loyal and pet the our and more pet quality, who of to can this provide service a of have base parents the country. even we millions across brand, we While our parents company industry

the to trusted to we As believe health because be the leader we or long, healthy in experts such, our say market goal life. happy, healthcare, to like as and pet every deserves wellness pet a is pet live

our success. the product This Next acquisition slide, base. have PetMed. thesis been capitalize milestone us compelling to engaged PetMed our our positions core strategic many move and between products with of PetCareRx By investment and for PetCareRx range can to leveraging us the broader a customer growth we further synergies aligns offer catalogue, organization. and catalogue presents significant please. the acquisition, and family, a opportunity latest expand our for a our into fully PetCareRx in integrating Since This PetMed for we on April,

refills on PetCareRx improve and its to our PetMed focused plan business. legacy PetMed has pet Since medication accelerates inception, primarily the

our market broader comprehensive care emphasis while our strengthen offerings and merchandising Our aim on meet pet a needs and customers a will position is to This evolution will in leverage particular to enhance with core capabilities expertise our continuing our consumables provider. pet expand the our of product as medication.

our yielding far, are results. efforts encouraging So

that their our our to individual recommendation our products, customers. the ensuring we acquisition, experience pet's returning have to engine relevant the products fully valued optimized is Since enhanced completing AI-based encouraging a additional site we've suggest needs. customers, to personalized purchase optimization site process Furthermore, to undertaken for data non-prescription thorough them

designed experience, and further convenient process In newly customer provides a addition, seamless checkout loyalty. our and satisfaction bolstering

In services nose begun PetCareRx our facilities. with have including into integrating tail, to line we commitment the providing to catalogue distribution operations, our from our

offer product the Purina integration, the class PetMed we As product world PetCareRx. part line in is line PetCareRx brands world. pet largest by food top line. the extended its one to of PetCareRx food Purina of food of product best ranks prescription Purina for companies have for now offering, we our in the offering including XX products, selling The the the product brand this And complete integrating parents. pet

pet on focus well management, with targeted that market to pet joint health among immune weight so healthcare. options be health and health, allergies, pet wellness help align and with and in goal the Purina's support, other providing our leader benefits

from unification and PetMed benefits the start PetCareRx. will see We of other to

leverage a unit started we to As lower and combined to buying able per our have on believe an customers at be our example, power will to deliver basis. cost we

of deliver achievement identification capabilities, will spent execution well with customer with and value better believe base synergies, commitment acquisition. controls. to us and power, targeted more year. shareholders and to platform. our with are migration accretive cost transformation to meticulous the cutting of product upgrading email Operationally, modern the and of EBITDA be we our effectively. combined to of fiscal enabling our this time on completed provide considerable we legacy This communication, the PetCareRx of strategic track our the focus we to and becoming service for creating able maximizing We edge adjusted that underscores our system potential objective Through purchasing on This our We have and on engage coupled unlocks recommendations. new personalized internal a end our systems before marketing

slide, Next please.

positioning rapid portfolio, calls. inorganic firmly we previous PetMed have for value strategic long-term encompassing we path call in previous different As operational capabilities, Today's PetMed has on a success, our tone has the charted, that the our expanding mode. enhancing organic creating a believe at been earnings transformation and calls we we rebuilding the mentioned over aimed for sustainable chosen product year, brand. is last PetMed from retailer both two in and our The premium changes and undergone marks as past ultimately over years, slightly specialty shareholders. investments, a

have the a transformation external growth-oriented about us well stakeholders We beyond as more we and our of meeting service as rates serve business. in serve medication our diversification entire the as gains business. strategy market expertise, thriving navigate our product as transparency informed PetMed been and focus year-over-year These our essential revenue, that becoming journey four towards continued indicators These of customers, the new criteria consistency deliberate are for to in into company. to growth in and ensure increases exceeding growth execution our our in communication that indicators indicators performance a the well recurring performance guide for are

quarter particularly am stages. I news It promise note our thrilled evolving to is share transformation in signs ever to reacceleration in trajectory, an is important signifies business exciting our early a including the that of this the company's early ongoing process, a that in business transformation.

four successfully positioned However, delighted previously as that we the outlined. key as ourselves performance business, am meeting today I announce indicators have growth a to

highlights now the for and would some of to quarter. I the summarize like key financial business

for growth. had setting full As the this customers quarter PetCareRx. revenue results returning year-over-year a and both two, Number one, we record increased of reminder, Number year-over-year. includes new

now of Pumpkin insurance sales New row, decline. are half month. the a Number next consecutively Number three our Insurance four, XX% a our partner our turnaround grew reorder in insurance year a year-over-year. for conjunction in X% a three, customers growth quarters we of business, or XX launching new represents from in is are which two which market product with and million

While provide into a our our comprehensive delve quarterly in highlights. would financial glimpse a notable like some financial CFO, presentation, Christine later analysis of Chambers, more to of the I performance will

the positive a customer XX, a XX% of as XX core well increase prior am recent as Furthermore, ending XXXX, For business. stabilized our sales new in share results our pertaining pleased sales of the the as combined year, million PetCareRx XX to base. year-over-year of compared result to were more an million I of acquisition quarter to sales PetMed June

PetCareRx we XXXX customer a XX% continued us QX notable consecutive breaking new This customers year-over-year since into customers quarter quarter, decisively chapter and of new of growth representing declining acquisition the the increase. next the marks efforts, growth. growth, the customer third acquisition. of of new our increased to for net propelling is In reach This approximately XX,XXX net new the attributed achieved combined trend of with PetMed's achievement

investments. at commitment lifetime X.X, New expectations. remain value line to customer in efficiency acquisition quarter for to our the with our affirming stood our Customer optimizing customer marketing acquisition costs metrics

in improvements sustained business. report of to subscription delighted are our We the part

Our program continued to has expand. AutoShip Save and

our programs, marking our revenue sources for fiscal membership was of from a increase year. from last AutoShip first the XX% same During period significant recurring derived quarter, PetPlus subscription the XX% and through

excitement want I share Lastly, emerging the regarding to pet opportunity in our insurance.

parents. which is expansive a of further care in as American significant less that insurance community partnership be Pet its one by upward pets over quarter, next with offering North comprehensive Pumpkin Recognizing for a opportunity, X% this As to million pet insurance solutions. solidifying to to product pet XXXX, fastest than projected commitment services, pet a Association, launch the pet According Insurance insured our in population. insurance new We non-medical our plan introduction this the the accounts Insurance the continue offering to untapped trajectory. viewed we million were growing envision mere of our will X Health of the of total X.X valuable as within pet

Turning to X. Slide

discussed well medication past positioning future is from authority to extensively and market the undergoing a have PetMed several pet being. being foremost quarters, as prominent in transformation a pet the a healthcare, pet we leader expertise strategy on Over in itself direction. retailer our

strategy from parent's to for holistic our become and healthcare revolves nose recap, medication, care, tail. is and goal to pillars; Our To health four pet every nutrition wellness go-to key pet wellness. around destination

of pharmacies and most established trusted long PetMed the one itself the has in largest States. United pet as

pet orders facilitate now X parents. millions veterinarians prescription introducing of expertise enables and prescription a working million PetCareRx pet gap actively logistical growth to over to Our for significant base represents food premium on The we Express, of extensive the us parents. authorize as between bridging and our are PetMed annually, of acquisition opportunity and

the of the of as opportunity a In to regulations potential evolve. substantial we terms continue care, telemedicine market nascent pet as recognize

California closely embracing in offer regulatory telemedicine. September, pet we of XX% we care them million with markets more offer in These states. states being combined of population with their areas landscape and people, owners will in observed telemedicine Today, product We more shifting Starting our telemedicine XX full have the Arizona with over pets. and for in geographical need XXX Colorado a new Florida, pet present of encompassing untapped QX. expected in nearly

Our parents telemedicine enabled first a Vetster our an growth strategy, offer is important it to partnership as pet element by become larger retailer pet the of with to pet has PetMed to strategic bet To scale. for wellness This accessing consumer will continue their care important further parents alongside to awareness. achieving and pet enable our pets. and regulatory evolve and towards education changes,

able excited to are insurance. We be to offer pet soon

leading by Pumpkin Our JAB insurance our bring bring Holding, is will to partnership profitability customers owned company majority which now over to incremental with time. Insurance, and value PetMed will incremental

their for We crucial in ourselves consider and unique four as positioning experience destination. wellness parents nutrition medication, preferred everywhere, pet pillars; establishing and care, these brand a go-to

better our more parents pet health over than ever before. now options are to positioned X offer million We

supplements. food, prescription insurance on Pet Pumpkin a for our begin offering telemedicine have health premium site We soon, soon of can health parents our and through and starting can Web vet furry food appointment Insurance, book with partnership variety we our options members. a family wider

presentation the to over hand to like I'd Christine. Now

Christine Chambers

of in PetMed XXXX. to performance. I'm combined results quarters. This report PetCareRx June and fiscal quarter closed reflect quarter prior PetCareRx on the the QX delighted XXXX acquisition XXXX the for acquisition compared XXXX. And including X, will our almost be April year only first fiscal results results, full consolidated quarter of Matt. to Thanks, The a XX, the the QX year ending of PetCareRx

to of new sales which was year-over-year period PetMed's XX.X due with of growth quarter The was growth in slight PetCareRx continuing well last as from the the combination offset million same in PetMed's incremental of is XX.X%. a sales, reorder XX.X sales million First to sales customer sales to in stabilize. as compared year, growth

XX,XXX previously growth customer welcomed mentioned, year. XX,XXX new in parents continued customer approximately of new to prior new quarter net our This of this Matt trend As year-over-year. compared pet year-over-year. growth We we XX% represents the

the In same of for addition, of reorder X% in million the the increased period sales compared year. XX quarter million last reorder XX.X to sales

added also product which to a customers. programs, emphasis sales. and our PetCareRx diverse wholesale range sales we for million acquisition revenue bulk greater an and including and revenue, grow the and membership We've With as percentage sales recurring savings a Save of PetCareRx, total X.X PetCareRx our of of on value associated continued offerings, with membership its AutoShip recurring our and strengthens base. drives sales engagement provide This

as from same year. As up was the XX% sales Matt in recurring up the sales a total percentage last mentioned, quarter, and period X% sequentially to XX% compared of

direct Gross the improvements in has percentage profit PetCareRx and of in to and as relationships from in of as X.X PetCareRx an new the gross XX.X% increase Since year-over-year, payroll due manufacturing for year same increased driving compared X.X last year, supplier part and XXXX for expenses G&A improved margin. combination well and a in as in XX.X% to sales million made costs. quarter the was terms prior acquisition acquisition, XX.X% to quarter. in million synergies the benefited quarter the fiscal hires

procedures are or first cost that compared income XXX,XXX $X.XX million diluted drive to quarter X.X for the per same In synergies was addition, $X.XX year. we or share combining period teams and naturally more operating net diluted for loss share the processes. G&A Net last per of efficient and

the have Excluding acquisition-related share. diluted been net or XXX,XXX per costs, income would $X.XX

advertising X.X expenses, and EBITDA and $X adjusted quarter for other last the was by higher items was compared XXX,XXX gross of quarter million offset of same X.X million year. million million expenses. X.X non-operating Adjusted income to EBITDA the higher excluding Increased profit in

no on X. ended Slide We that on with the This sheet quarter into of PetCareRx. consideration in XX.X for $XX paid XXXX, and cash cash our million balance X, debt. to takes Turning April we million

remains to long total shareholder committed the management Over driving run, return.

a at have quarters. this June as We declared the cash same $X.XX dividend level year prior in

the continue of will capital to need dividends. fuel payment growth As to with we the always, for balance opportunities

a well continues combined acquisition to build business recurring Our with base, perform through to that more continues recent stable PetMed our revenue PetCareRx. a with core business customer growing of

efforts the we the growth. future balance will on setting to expanded year, the of focus which drive For will continue product catalogue organic up

through value share with to And consumables. in with synergies term, upside more and opportunities we immediate our to provide the believe improve Operating creation with a longer broader Pumpkin services PetMed's in expanding selling Vetster adding a us food to margins. our partnerships from wallet through continue of differentiated business our on assortment

I some concluding call back for to Q&A. turn prior Matt will over the now remarks to

Matt Hulett

a Thank you, PetMed The Christine. significance business. growth holds upcoming fiscal for focused year as we transition into

growth Our achieving goal revenue costs. is while to as top anticipate in maintaining relative deliver revenue. scale our We healthy stability we leverage fixed line operating

on previously I intensely our expect and As integrating remain investments executing emphasized, our on team have strategic our management investors should focused to vision. recent

necessary growth confident sustainable components long-term are the we've We that to assembled and deliver profitability.

are we and PetMed, our about strategy At highly growth optimistic future performance.

opportunities market as enthusiastic a brand. we're offers the are parents. pursuing by pet direction that ample navigate expansive and thrive pet for strategic the providing premium solutions believe us firmly for distinctive We retailer We about specialty to

consistently become trusted aim expert for As health to the our we emphasized, is parents. pet pet have

past our shared we have pet resilient, the progress And company. continually profitable and health made strategy substantial with we building Over in year, growth have you. growing a

With that, prepared Operator, we may now have. our address are any conclude questions to ready you we remarks.

Operator

Capital Street your line with our first Thank Instructions]. And question comes Ryan Markets. Lake the Meyers of question. with proceed you. from [Operator Please

Ryan Meyers

Hi, for taking guys. questions. Thanks my

And curious stabilization business, the out you seen the how business revenue the kind during legacy I'm the me, of just look strip further for like for there? one -- business have First did if legacy what PetCareRx we quarter?

Matt Hulett

PetCareRx and answer really PetMed's cover in talked the also I'll perspective, it to One that's is just PetCareRx business an jump as business detail on we're running integrated of PetCareRx is version Ryan, Christine, but financials This PetMed margin. of gross primarily if know, part same and economics. similar to free from two operating for of take required. really don't about the then feel mini effort Ryan. unit the the step the we've out an as Matt. a I question, from to Hi, We've a reasons. the back that is you made, consolidate

So perspective about think catalogue an we for And that's acquisition of an expansion. it. then kind is thesis unlock think how we from delivering really two, PetCareRx on about

very concentration else, PetMed know, popular everything on you little medication very As including and has and high of a other largely sales food consumables.

the And year-over-year And as the the being so out a said, can basis We're that a returning selling really step experience stabilized we And the is don't the anything the couple we utilizing base catalogue. from talked improvement same more there's your than and feeling PetCareRx heart standalone about is customer up about kind like has add new consolidated a since our perspective. a that more PetCareRx, it to we about Ryan. towards is the year-over-year kind for PetCareRx PetMed PetMed PetCareRx question the And products natural how when of base, the did that. of you'd have that stabilization much say we then started that's growth. And of as especially think extension business. business. to business to That in been think for else returning eye Christine, but we of of years know if of ago. on I I majority net And, customer, called growth

Christine Chambers

And Matt, to way Matt it, together, captured the we as top well. know, looking you've we're mentioned, you companies synergies that bringing as two in are think like over time a line. cost Ryan, on I the drive

something two but as as just operating really companies together, bring entity. those to that's we So one consider

Ryan Meyers

PetCareRx that how or to it's been the guys any play know over sort only way next been of have able quantify selling but I helpful. see of couple revenue you Got And to you with of obviously, a kind the there expect that to cross the out it. is That's acquisition, then, quarter quarters?

Christine Chambers

Yes.

terms I really we're said, -- Ryan, of the thinking Matt two and businesses about as So have between the in the operations. think, that we levers

As catalogue we'll I think driving you Matt, do want with our anything? on to see add time. very over you and expanded we're the focused growth to on customers, PetMed know, associated the that

Matt Hulett

bit. order will around think actually extension we for the earnings said questions long measure of our LTV call, the will think on last is again, over And, would term we catalogue, like products, our just I up be went that up In customer natural calls, until the previous of of LTV us average Purina We site base. the value. lot get a order Because a thing Yes, purchases on average the which AOV to, integrating larger large time. ago. value didn't will follow. of we say for prescription more a including actually that months just started successfully metric we with And be be outside cycle PetCareRx jobs irregular refill several we're of repeated have to access the getting I best line successfully, weeks our we quite when couple vary it swaths could just do the of ago. The don't recently growth on,

early So we're our on it's ability traction and to products. sell upsell seeing different days, already but cross

measure we that So will stay the LTV. tuned, but think best be

Ryan Meyers

for taking Great, questions. that's Thanks helpful. my

Matt Hulett

Thanks, Ryan.

Operator

from next And with Lebiedzinski the line Anthony of question. with Sidoti & question your Company. comes Please you. Thank proceed our

Anthony Lebiedzinski

taking for and afternoon questions. the you thank Good

to follow up, just So as clarify. a first just

I you Christine, talked think was you So on you slight sales. guys said But year-over-year. offset when reorder about reorder got X% that growth X, there on, then, a Slide in of

were the know two trying I put being So core or about business to you business the I'm don't talking legacy just if the together. down.

on more wanted get please. clarity Just that, to

Christine Chambers

Anthony, for thanks Hi, Yes. question. and the

stabilize. the on acquisition. PetMed's the on And quarter much specific about majority starting base see the to also new as returning -- PetMed's talk a base. did again, very is looking obviously, this focus to the as at of basis. base, from did PCRx see and combined and the growing did we around What I the combined slight starting that's customer But continue that decline. the at growth base that And decline PetMed's mention we the to So to we returning we are we a that

specific a sales was to basis. looking and more said But And on it reorder seeing at business. So results like that growth. I consolidated that the X% we you're mentioned are that's Matt where earlier,

Anthony Lebiedzinski

Okay. you Thank that. for

month you're us flea the continuous early into signs medications. So of far, the you stabilization? seeing second Have to thus into could give peak Or seen is you're what what Obviously, one the readout seeing you're tick quarter. if second can for just as fiscal you summer an so on comment And far? far time quarter. wondering and you

Christine Chambers

we -- said, I this on Yes, on basis. I like combined see very we're looking think much at a a,

space really enables expanded I increasing drive think others that that in sales at really change expanded on that additional returning time the of focused time. stage. catalogue, over and excited existing reorder wallet returning over continues expanded to PetMed We're is share base. trajectory really this PetMed based that PetMed's the on PetMed We're to the seeing business and the catalogue existing space that orders focused and on we're about catalogue grow how then

Anthony Lebiedzinski

terms you achieve is Okay, think some little timing. And a then synergies, expand gross on the on operating you bit expense you. that? of mostly terms maybe this margins or can the Just of talk in And you can synergies? more got in

Christine Chambers

very Yes, across We margin question. economics, businesses. both that's see gross unit much good assumptions a similar

of I line improve percentage is think bottom in where as time expect to improvement revenue. over SG&A see that a synergies the we'll cost the

these mentioned, of we see we're without and businesses huge in similar the we've bringing very increase operations in expansion CAC. that together those as As a of LTV are some also

vendor the see improve synergies cost driving will, our SG&A that ratio and across of like And efficiencies on time, the to we're as across then mentioned, so that very Matt separately over operations. relationships time focus much CAC and catalogue, LTV based the expansion over on we we those

Anthony Lebiedzinski

your the think dividend. how Do And declared as then okay. just or dividend, about of you you kind on you, Got thoughts or the should guys have about same update last question, the more investors my it's of on you last talked I call? any know

Christine Chambers

well. think there growth Yes, opportunities turning investment. company, we the is And growth there a being believe, dividend think quarter, do versus we than as as as are we one are and more we something about have scenario be or and returns growth always quarter, the that a the flow, we year-over-year We as now corner free for to drive could shown for whereby see first I dividend. we over paying for think the from using cash reinvestment momentum we're higher

so for looking And at to always the growth. capital we're balance for need fuel the capital allocation

So I think come. there'll to be more

Anthony Lebiedzinski

thank and best of it. Well, luck. Got you

Christine Chambers

Thank you, Anthony.

Operator

Thank you.

Our ended. call would question-and-answer the concluding of company the for the Matt to call to like back session portion has remarks. his CEO I now turn Hulett, over

Matt Hulett

expertise And our unparalleled. opportunity joining reputation lead for PetMed's the envision laying for PetMed been ways that we in unique and and to value. future that confident foundation are results brand, you innovative meet shareholder operating will we've along Thank the increased with and and market call the today. I'm will

to of accelerated as offering sharing parents products pets. lives forward We services positively the have progress and that our you greatly we our your and continued support. with we Thank change our pet and for roadmap, look market to go

Operator

Thank concludes you. today's This teleconference.

you your this at time. lines participation. for your disconnect may Thank You

PetMed Express (PETS) 1 Aug 232024 Q1 Earnings call transcript