PETS - Earnings call 3 2024 | PetMed Express, Inc.

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Operator

Good afternoon, everyone, and thank you for joining the PetMed Express third quarter preliminary financial results conference call. My name is Shamali, the operator for today's call. I would now like to pass the conference over to our host, Mr. Brian Prenoveau, Investor Relations.

Brian Prenoveau

Thank you, operator, and I'd like to welcome everybody here today to the PetMed Express fiscal third quarter preliminary financial results conference call. Certain information that will be included during this call may include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and the Securities Exchange Act of 1934 as amended that may involve a number of risks and uncertainties. These statements are based on our beliefs as well as assumptions we have used based upon information currently available to us. our uncertainties concerning and reflect statements events, statements risks, involve assumptions. these current future views these Because Actual results could differ materially from those projected. no realized, matter in as to There subsequent occur as a no forward-looking should or competent be of assurance future a forward-looking or upon any can financial warranty or regulation results be on or undertakes relied the statements PetMeds. PetMeds be these publicly presentation matter, and operations this contained law, any representation nothing business is or except that be obligation respect will including legal may update in of to applicable as required events, based condition authority. by other or any

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

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

Matthew Hulett

recent for Thank the different call. call you, will making follow today's time today than to Thank slightly conference you participate in Today's calls. Brian. a everyone to format

of regarding today's press release statements. As tax-related reference a may for afternoon, previously of for planned restatement in to an a the issued our that information accounting those issued listeners certain filed of Please errors this many additional financial certain statements and announcing those due X-K likely factors matters. saw, financial affect documents we restatement

reported delayed. in XX-Q previously to be to due to the will are year fiscal for treatment XXXX's this the tax-related our restatement for required items. XX, quarter's accounting related third delay restatement, XXXX, in due Additionally, ended filing multiyear administrative burden process and and errors certain a XX-Q quarter December the the The

on two, of Number the strategy. three, first the accrual we impact balance. fiscal sales Chief and is our the items, accounting want no or identification fourth for Christine number business cash call. Financial the for working as no together the recording the restatement operations a to accounting finalize fiscal the an impact possible. year of all restatement and The our there quarter on As quickly And you matter day-to-day current last restatement in one, on on business as our of high-level has the will tax-related quarter our a accounting and update of Number today's tax provided discussed and time spend be in to restatement the quarter. with more are portion specifics a during sales the consultants treatment our of progress the few discussing issue detail call pertains Christine the the to the her on need Officer, Chambers, in of call. We things. fiscal from tax part some would accrual. I and second remainder relevant to sharing of in complete the stress third discussing this made partners recall, is like

with a customers our the related For business. Returning ending to balance growth an customers $XX.X including PetCareRx accounted gross the year, PetCareRx. We million focus food XX, for of sales business. to of our PetMeds a activities and reflecting in during $XX.X sales expectations. year-over-year, the maintaining introduce year-over-year our of X% our regimented million prior as of gross between XX% which December million on margin delivered intended of margin line to the overall reported historical reflects was to the sales XX.X%, increase quarter of promotional quarter, a addition XXXX, an acquisition of compared a of recent in This from $XX.X

levels. catalog provide category more raising more offer In our and the at about products pet customers, and our initiatives value to parent brand existing awareness to on food we've focused of terms intensely our both

of PetMeds addition initiatives through are the excited of website. Along food coming and those the to lines, center e-mail are we in our our brand call months. announce Additionally, enhancing we cross-sell another CRM, major

roll was start month. Premium tailor-made premium into premium food parents market Diet in heavily health food And are and we'll promotes Science to very for options. be category to PetMeds, with to this next new for our PetCareRx. important have out this food Prescription acquisition quarter, believe as Diet part a ones We its immune to early healthy ability and Nutrition to focused. entered premium skin, want Hill's known as Hill's customers food options on size the brand more Pet order enhance average launching customer. are our prescription that the pet are put, as We provide wellness in and this Simply continue in PetMed of food value well accelerated category. we pet increase interact in Hill's with Science as our nutrition partnership brands categories the important customers additional relationships of and leaning system and each as and lifetime our as pets. these will go a coat the are food due us and expansion for often,

and turn to advancements operational Let's our initiatives.

products a us A key the customers, our including subscription base buys We transformation a controlling customer more long-term indicators Save will enhances our duration, accelerating which for model or business: additional increasing on AutoShip This parent subscription have of include & types by to our us capability for performance value. is product recurring from driver recurring that our or providing pausing expanded basis. We buy our adding products. base driving and ordering experience, like offerings talked revenues. key loyalty and more pet exceptional their will business to successfully expand the the capabilities and recurring current was about control activities new customer core recently compounded our help benefit new delivering current to prescription the the believe PetMeds number from business the of facilitate platform, and launched, customer AutoShip over

a now integrated the believe licensed that of more more available become. functionality, is on & digital AutoShip VetLive uses which We complementary on our our a our all pet also basis. We for parents XX/X, products connects the program, to AutoShip loyal which over have parent pet Save customers they veterinarians connection

programs revenue Christine and quarter, grew year. I call XX% XX% to a last during turn PetPlus Save AutoShip Our Chambers, the increase revenue will over substantial last to our from time provide to our CFO, now of financials. same quarter's of this overview the fiscal the for & an of

Christine Chambers

X-K determination previously what preliminary conjunction determined we auditors, to tax probable liability it the and guidance reviewed, I so accrual with be on our third in of accordance the financial year as to tax was fiscal restatement the to and XXXX. the issued company we the will reported selected from fiscal was appropriate first for estimable required, of tax related fiscal in want PetCareRx deferred that as quarter quarter Matt. related treatment previously Thanks, I for asset address our the the sales statements believe an recorded GAAP. In in treatment associated well company's RSM, the year with announced in accounting in that XXXX. In the with annual a sales the and accounting address for this we the April acquisition sales year period that accruals results XXXX, tax to then afternoon, third tax based a was XXXX, sales accrual earlier the

sales require $XX have for legal company XXXX. expected $X this tax amount sales to March be in company rather the deferred the XX, affect would income beginning period. of to million Committee was maximum prior fiscal the million restatement Because the relates XXXX $XX potential XXXX decrease quarter and $X on in restatement result misapplied of to of potential of XXXX maximum year the our as on XXXX, the liability of fiscal estimable liability recorded XXXX. The the in to quarter million asset reported approach expects is based and of net and based approximately in the periods the company expense quarter has the which tax as liability correct as to it tax multiple record Board and fiscal the we fiscal in expect sales Audit to originally the that sales periods, revise of year in expected GAAP year liability most of The impact second sales general approximately a than management's increase included the fourth recorded and adjusted subsequent fiscal to statement $XX been concluded, of first range same under review, XX, record the probable March to for administrative liability XXXX. The gets a a the significant liability for corresponding is million. and year second As as a approach, impact of $XX tax million million and in income to determination, periods. liability tax year a in a to the This

valuation asset reported also revised. resulting of operating the XX, accounting tax fairly of balance the the the acquisition forward financial tax at adjustment XX This acquired. The represents impact PetCareRx and on the in asset the this addition, to statements. expected the and a September tax of related In sheet. company to is revision increase June matter will prior that the will net carried related decrease be the surrounding This deferred deferred goodwill on an company's result technical the the believes restatement XXXX, to overstated loss a losses net limitation operating

have or that, impact while does unfortunate, expected on important restatement to However, current the of fiscal not and impact business further adjustments The strategic is balance. or to priorities. not our XXXX restatement year is may operations an impact revenue note the sold sales arise. It expected cash day-to-day cost to our not is company's

for will the on with XX, results of as experience on the ended quarterly gross potentially associated restatement, impact in expects result completing XXXX quarter, company process, To a XXXX, third the I and with the restatement this XX-Q quarter line file administrative notification report December effort a preliminary of filing selected and will XX, delay cannot ended restatement we due quarter to its the Form the XXXX. below quarter of could the late the As G&A. Today, to report level profit numbers our for fiscal filing December of the SEC. reiterate, a the time comment

a of only results results for quarter As XXXX. for of year will including third be reminder, combined fiscal PetMeds acquisition the compared PetCareRx this the to

year-over-year. The $XX.X reorder was PetCareRx of last new partially $XX.X to growth sales million by legacy growth to was from order in of incremental in representing sales XX% and quarter Third acquisition same the declines the period sales. due offset compared PetMeds sales year, of million,

same single-digit welcomed quarter, promotions greater Save the year same the drives new an in membership promotions profit to to sales that compared intentionally to sales our nearly percentage period in percentage did of of not quarter sales XX% PetCareRx as due including to the is in engagement the last a value the we & quarter, total year-over-year compared decline in sales of quarter order the Recurring sequentially lower XX,XXX We up This continue due in attract was legacy onetime the as repeat primarily XX% last a decline a experience was same and this million X% sales. We tested grow in reorder The and last total as year. sales quarter. XX.X% last year the pet a compared in our they quarter prior and The sales compared increase period strengthens $XX.X prior year. year-over-year parents to not and to increase in the PetMeds same for to and approximately of of XX% recurring sales the high continued prior sales. $XX.X quarter prior did as from to for base. sales percentage revenue, were the We've customers. Reorder for reorder period up year. Gross AutoShip XX.X% XX,XXX was XX.X% year. from recurring million

hand XX, December $XX.X million debt. on cash of of we and XXXX, As approximately no equivalents had and

will to turn some Matt call back the concluding for remarks. I Now

Matthew Hulett

Thanks, Christine.

statements, fiscal recorded public we've and financial business to As to so. Despite to transparency. lead an doing and to and, executing the operating company, misapplied company. the determined was XXXX I've complete a strategy. statements reiterate sales accrual tax effort in upon to that GAAP additional unfortunately, an during is can full this, this our I that of later running with accurate correct paramount remains relied fundamental In on provide and that always focus CEO our having promised want on financial Providing be

AutoShip a executing care our health pillars: medication, will our PetMeds new operate & new our key major X premium to food strategy as infrastructure a products with around adding on upgrade PetMeds Save and customer into on is This wellness. brand, announcement trusted represent as pet X customers. services to core health well in pet and a nutrition to to Our expert. deliver more a milestones parents journey pet PetMeds of range along a focused the existing care, recurring value revolves to significant The of initiatives basis. base broader million our transform

statements, we now you. Thank are our we today. Operator, take these for With questions. conclude prepared prepared remarks to

Operator

[Operator from line Street Instructions] Meyers the Our first question Lake Capital Markets. Ryan of comes with

Ryan Meyers

a for itself. couple what with Can happened? you on tax actual how just essentially and or discuss happened me, error just First restatement one actually the the sales accrual this explain

Christine Chambers

difference and sales I thank first surrounded Ryan, away. discussed glad The need related year thing that start I'll last important you. I'm our it's question, and the to and There that. really by identified are And asked treatment. accounting tax the period things this Christine, these to with related is X is to same that taken historical, you prior the be is are exposure issue

reiterate, analysis. So or accounting about the of the just not facts result treatment. to is new this any It's new

let talk just secondly, treatment. So about are sales me account X for period ways prior different liabilities. There tax to accounting the

is as mentioned, on, and I based this You estimable ASC XXX, apply approach. can probable which

a what's way is a accrues this is important, adopts strict to which can -- applying it accrues on by XXX, and liability. This interpretation this ASC at that look liability other the The more legal approach. maximum based you legal

diversity Historically, at versus is they're practice believe has when judgment. applied we been XXX. we just at now applications, we believe issue. again, you're and ASC you're to applicable But And Now looking of this XXX there about XXX reiterated that that than is better often look accounting XXX.

last the -- want I yes. thing Thirdly, to you

Just to reiterate as well just Yes. the thing. third

disappointing, begun really partners working mentioned, And provide are, to and issue resolve. is integrity. restate highest late we transparency that third making the quarter to and the of operating identified with with I we have Matt and our to we have having standards as transparency While in proactively sure the committed and immediately

we're as out possible, on we this as more as can. So working we'll quickly get as and soon

Ryan Meyers

That's helpful. then I accrual $X it. would previously million. estimated And originally $X Got about be million the understand. to you talked

obviously Does be accruals more the to that be we more how Now once will that. thinking a be you it sounds like sales to revise should it's once much quite go those than mean about you're in taxes bit paying Or tax going issue? that guys through? able this

Christine Chambers

you. Thank Yes.

great no in Ryan, of Another analysis demonstrated resolving our not our change, states, strategy to sales with and has question. approach settlements probable the issues or with what the tax Again, and We've states. history estimable of is again, changed. most

no accounting change tax sales with resolving just our tax matters, these change. to So an strategy

Ryan Meyers

And the business. it. the here of kind just gears Got to of Okay. fundamentals switching then actual

on of if or little wondering the you business on there. Just more further you've PetMeds comment stabilization core if maybe can seen a commentary you're bit seeing what

Matthew Hulett

And previous the base, returning we noted, mentioned platform, to Christine. as that, that our a those legacy the noted build noted add about more declining call, getting calls, platform. that on management as the well at then two, us the AutoShip different a a flexible ready can products, things: We I'd sitting the the returning also, have obviously is parallel, And Ryan, that new which AutoShip been order think call a The brains getting think X call. And AutoShip comment grade. interacting then we was going what & ago PetMeds as and to just big to system. The spent thanks to of old year really industrial really business drop more to with upgrading we was churn around on returning answer on company to core that platform and customers with enables because several infrastructure we've order much relatively old a interacting to several take say, growing this I've I released core platform overall us do one, bit be this system shippers, on that. really, from little in subscription customers distributing is consumer Save warehouses; around really noted is question. color is but as PetMeds the very on not our PetMeds. would system that to and is Yes. that the adopt in sales stabilizing less; enables lot more the Yes, customers weeks there, I you rate and base our base I higher just that for quarters. I focused back the a customer than end as of answer percent the like same the XX%. customer with We've an that to be just a good a really AutoShip of in We'd to sales that.

direct-to-consumer XX%. we know that couldn't to investment was much we goal the a have higher original unless that Our system. ago a brands We other about made percent. And upgrade year have this done

more PetMeds, buying So going long-winded platform, And including key from to way, products in future stabilize on base AutoShip unlock food. Save because much a a more AutoShip & it's customers more think, stable really is be to a platform. we that this

Ryan Meyers

me. then question And it. Got for last

the the food that guys But quarter business wondering of obviously of Just any we a contribution the is or how sort you know can business. think newer business. comment that's piece I saw if trending? should on there you about during

Matthew Hulett

Well, X two of that a is then signed that had answer that. is in our that. customers One bit And for on parts. brands executing AutoShip customers I products is and want food there Thanks program. our Yes. little the more want, getting getting on the color

top expanding announcing and And Science that of we'll we'll brands Hill's the food currently relationships And and are we launching premium customers. the brands. quarter, launching huge be for that's partnerships with be We premium new So announced a Diet. deeper deal on this with these Hill's the future. in our first prescription just our part, many

They to medication because customers those very premium the food and we Getting of customers a how products, given is prescription of brands conscious. types those Our go brands. use know health large vet background. prescription are our many our They want lot. online definitively

the first them and get the that's signed. unlock. So Get brand

we've sales executing is is our It's percentage large a that. of which sales, as on very low. in And growth category. second food fastest-growing our The a seen

better brands for as business. trend good right And better so at the continue our at we a the get to should customers, get be really marketing as we go-to-market, that to

Operator

And of session. we turn over have closing the to end reached call back remarks. now question-and-answer for the I'll Matthew the Hulett

Matthew Hulett

Thanks, everybody, today. Yes. joining us for

Although broader that it as that, medication was and PetMeds management very unfortunate business. health along team business as change, a pet our to from today single Thank accounting the this and We're for we excited news you a doesn't tax excitement you. Operator, pet category the we're the all regarding you issues much overshadow future your our And transform journey. hope we of liability to a continuing about very expert milestones thank here. much. done attention today. time about articulate Thank

Operator

and concludes Thank may conference, time. this Thank your your lines at you participation. you. disconnect today's This for you

PetMed Express (PETS) 8 Feb 242024 Q3 Earnings call transcript