PETQ - Earnings call transcript Q1 2022

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Operator

Greetings and welcome to PetIQ Incorporated, First Quarter 2022, earnings conference call and webcast. At this time, all participants are in a listen-only mode, question-and-answer session will follow the formal presentation. If any much require operator assistance during the conference, please press star 0 on your telephone keypad as a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Katie Turner, Investor Relations. Thank you.

begin. may You

Katie Turner

Zvi you of XXXX Thank call us PetIQ's be Smith, Q&A. Officer, on Cord Sholtis, for Officer. Good and available Products President conference for Division, call Quarter Michael and Executive Chief earnings Chairman Vice today's Chief and First Financial Christensen, Susan President afternoon. Executive and joining Glasman, the webcast. are also On will

made and to Securities beliefs the make and today to reports meaning the risks forward-looking involve during these from the that Form adjusted Before company's and the we results risks non-GAAP call, certain today's described forward-looking will of actual in for with from detailed call adjusted statements. filed management or These any forward-looking on could company's statements management other adjusted remember the within differ on actual expectations on laws. begin, securities in issued and note to course today. and that discussion measures, those may and based management's materially EBITDA. a time-to-time Exchange of the those profit, income, Please expressed adjusted annual differ of this refer federal press uncertainties that are net including refer cause Please gross release and or Commission please statements SG&A, current report events financial implied statements from materially could the XX-K

refer with measures a reconciliation release information the today's for a most considered not of presented be the substitute the measures While intended non-GAAP prepared the these this as comparable GAAP. for non-GAAP accordance measures GAAP. accordance with information isolation useful company in believes is for or financial Please in in investors, provide to to financial presentation of will information to

has that, presentation over like Cord for addition, with Christensen. to In posted And the I'd on turn a supplemental website reference. its to call PetIQ

Cord Christensen

financial to today results joining our I'll highlights Zvi financial everyone. and our discuss good overview then results. We And and us Katie. appreciate begin afternoon, you, review with business our will Thank of you an first-quarter outlook. strategic financial

to reported our Finally, I pleased We an sales Zvi, Susan, your first-quarter ahead be XXXX. with and on questions. at basis. very net increase start our $XXX.X to million a of answer will - We're XX.X% expectations of pro representing forma Michael, available

these were and products our strength channels EBITDA posted also The fueled generated results. sales $XX.X XX.X%. EBITDA improvements. expected, growth basis million to margin results our new across broad-based of and innovation. products also with product segment offering products of year-over-year of XX of quarter record gross had adjusted pet solid we categories was We margin another which points in our was diversified guidance as continued resulting services benefited Adjusted and increase strength stronger The we than from in manufactured

the in in of also anticipated We what flea $X and first in second start will of in fill the seeing trajectory products half season, quarter had Product happen of was support our segment that of to the for Zvi second date consistent in to the of growth business view first our the of we're and and XXXX the of million XXXX, orders quarter XXXX. more reiterated second quarter our and our year. highlight the outlook context discuss to growth Today, tick

over to quarters growth with remain to posting the profitability. quarter in room in $XX.X best get improvement, year lot through of onset recovery At market our quarters. Services fifth for Our affordable purpose-built Animal partners. these revenue towards wellness on EBITDA modest back convenient XXXX, addressing segments still business retail segment its care. and This profitability We positive We've health to as of Services we're pre pet company a Services created in pleased segment's COVID reported and the next Services -dollar made although of million. a large assumptions and work several Health net multibillion PetIQ, e-commerce quarter we since segments a the we its and of -pandemic consecutive for model growth we've adjusted unique for future the have committed the

We and continue product Clinics Specialty, with their parents Online wherever to Animal pet Sales Pet purchase Mass, be choose channels. Health Club, Pharmacy, our including and products Grocery, to portfolio

Product sales the to of double-digit categories growth Focusing on top sales year our million. quarter. the the five start year-over-year We our to XX.X% more results seven $XXX.X solid of in on net growth segment with segment proforma across product a during basis generated detail, generated a manufactured

X,XXX We in have over continue to with to share prescription dominant retail Animal online. a skews portfolio Health market over-the-counter brand pet and products and the sold largest

softer both In distributed and saw also a a normal than and addition, to quarter. tick growth first our manufactured start segments season double-digit in the flea despite the

rates tick premium and growing strong from momentum oral segment, year, which last year. by new contribution growth and compared into compared flea QX the new manufactured was to This XX% topical QX as the last growth product launch, supportive strong year. flea for as our Our NEXSTAR, increased continued tick fueled XX% to OTC strong well

standpoint, strong consisted prior exceptional it Our quarter also a Wellness the year our Health compared the period. XX% to sales. business and XX% manufactured of quarter mix growth From up distributed continued sustain portfolio in year-over-year as another XX% contributed to and

items the reach XXXX. than As products we believe sales segment can we XX% PetIQ's for greater manufactured of look ahead,

focusing health growth in the participate along to categories and as and the such several wellness, continue tick solutions We detail. in [Indiscernible] more largest and the industry, pet fastest-growing of on within with flea

this of over share time X total by XXXX, gained was and market. share the gain category PetIQ at XX gained share Capstar, within and ended Flea Number This a which the frame. position the Tick portfolio both XX, over-the-counter XXX PetArmor March share both XX.X% of commands the led share basis now the For weeks and points market significant

picked in an points of perspective, momentum super had store basis quarter. As we quarter the high-growth and as XX Wellness, From line the sell-through share. strong for Health continued a we weeks increased ended segment XX we while operator our The market, X% for we across the Wellness our club and segment X% up grew the of in portfolio large R&D during XXth. a premium Health fourth March for launched first this

in activation expect this greater quarters. XXXX in our item We even benefit second third an continue as to support from and play the full plans year and out

successfully launched brand, We premium Health line and this have super a also week. Wellness Foster

the Fosterpethealth.com XXXX to as their affordable call, track services. initiative to products on to and enrich options help provide find can for half we at earnings And You pet as and access continue online to second to smarter of discussed lives continue through we convenient be a our direct-to-consumer veterinarian-formulated in QX it on pet's we parents introduce

In terms materials, inflation, raw freight, and we of continued in particularly to have packaging. labor, cost experience inflation headwinds

across implemented increase in QX to manufactured most a we inflationary result, segment a price offset As these our of product pressures.

While we are these any balance is stabilize, action in pressures evaluating price have cost the offset required still begun of to to further year. if the

another XXXX. maximize EBITDA. pet year-over-year optimize on to and will continued Now our focusing generated results improvement parents. services Services to sequential In the positive quarter services the net progress disappointing as adjusted revenue our and of believe through segments We segment we quarter, make the growth the and segments, we we minimize

labor labor unreliable. clinic we our to schedules hours reduce continue and cancellations when is to First, adjust

our programs an QX enhanced of will new and support Second, recruiting center we for wellness balance retention openings in which increase the in XXXX.

replace centers to centers. the and XX allowed four hires quarter, our recruiting us veterinarians. hired open new XX During and veterinary team unreliable wellness wellness labor in These new temporary existing

of reduce quarter, to total in remain and performance to and new the labor the existing first-quarter of of versus openings the continue risk but until term, we our to near gain centers segment. growth capital the prudent on have place with improved wellness We the centers will We large in necessary challenges deploying a in the second all XXXX. efficiencies labor given visibility services XXXX market, have our vet number optimize

directors thank has Zvi, strategies to Susan tremendous at I'd been build decidedly with month our board that behalf us management help the team. this later has is Indiana. partner a Susan call president, the procedures of and over helping And in more Sholtis, operating on turn I to time myself. our to Before like especially of PetIQ and our been and PetIQ. develop family assets

including the valuable, four her been team our and Over guidance, support throughout contributions of our leadership, have last years, pandemic. the

to population, products team as XX%. our for wellness. has humanization a pets, a As in Beginning and successfully three-year division, increasing June will excited Susan our Susan consistent $XXX Health of will tailwinds, and incremental million transition together in brand customer talented, Xst, In expand health The closing, while convenient we we leader leverage President the goods. and added greater as a well pet to and leadership the will continue and more along including available pet pet of packaged newly His with EVP grow pet and experience product needed reach an create. Michael Under growth manufacturing Chief differentiated this fuel increase be our on business, the Michael robust for as to industry He position growth, XXXX, take is to of will delivered profitability. smarter Smith, successfully of of long-term our believe September. parents I'm continue helped and our to continue greater products new with the through segment. deep to assume us diversity, of for looking IQ, smooth across Products one us penetration CAGR increasing industry has culture helped our with role. have capturing the we created since Animal Officer. He sales household scale, role we Operating collaborative his growth consumer pets. operational ensure affordable

solid our Our product PetIQ Zvi. executed that flow. like to overview, continue would on well-positioned in well as to to I increases net we and service the well as our mission With teams profitability, and delivering cash now call turn over is generate and believe sales

Zvi Glasman

started pleased strong guidance. increase our efficiency an initiatives. the sales $XXX.X Thank XX.X% growth generated to our on and growth proforma results Products of off million. basis. QX and with team's our of us solid Services from record of we're and with segments, better-than-expected XXXX We net execution compared both generate you, We helping a Cord. And

flea year. the the were $X approximately in to million of of a experienced this sales and stronger-than-normal in As shift Cord timing QX tick expected we QX mentioned, for orders of to of resulted fill of occur that season start which also

profit First XXX quarter points gross increase margin resulting an last was quarter gross basis million, of increased XX.X%, $XX.X year. to million Adjusted and gross profit from margin $XX.X of of XX.X% was in first growth gross the the of adjusted XXX representing by improvement including company's quarter expansion margin favorable newly portfolio in XXXX, This of first the the an sales NEXSTAR mix product year-over-year. for product our product. of XX.X% branded points basis launched reflects driven a

were first compared benefited to Services We SGA expenses first prior XXXX to of for XXXX in optimization. quarter also million for segment million QX quarter the $XX.X Adjusted the year. first $XX.X million compared of last quarter million of from in year. $XX.X SG&A $XX.X the was the of

of manufactured the or incremental of XX adjusted As marketing basis brands net with period. a achieved to help to points XX.X%, compared XXX our investments a support of expense of We're of portfolio. sales decrease to accelerated was even leverage We a our expenses, better a our year continued than brands leverage percentage two new basis product which and expense SG&A million, $X.X was growth expected. pleased prior planned points of operating launch with this the

EBITDA compared million, QX $XX.X income compared prior was income an improvement for year as XX margin million points result stronger in adjusted the Adjusted leverage Our quarter to period. of and to was our $X.XX. was basis was solid increase last million, sales an $XX.X increase million, in the ahead QX EPS of $XX.X resulting approximately EBITDA of the of the XXXX. XX.X% quarter of up an on This of QX to $XX of a adjusted was Adjusted Adjusted $X.XX in in of the This than year. $X.X higher XX% increase QX generated profit. of of reflects compared net net year. the of last margin to incremental EPS first $X.XX operating of XX.X% This XX.X% million. guidance higher EBITDA of was

million. of Turning the had of cash balance as cash company to XXst, and liquidity equivalent XXXX, $XX.X sheet and our approximately March

we capital quarter, cash of first the investments. working operating During $XX million generated excluding approximately flow,

the We be expect strongest cash XXXX company. year to the the generation history in of

XXXX. was facilities convertible Our loan, March comprised debt, our as long-term XXst, is of debt which term $XXX.X ABL, of million and

our XXXX. revolving addition liquidity, In as on cash of facility, cash representing $XXX the as its which we XXst, plus March hand to availability million hand availability credit million, company on defined total has of million of $XX.X of $XXX on

liquidity, build cash ahead, from services as believe segment in available segment, improvement We positions the opportunistically free drive the continue to to flow debt. our and company consistent down the contribution in product as pay growth well the quarters cash our and

Now, to additional previously EBITDA. for annual annual to provided has in outlook contributed also services not the -pandemic the adjusted to to assumes million our returned Xst, release. the very turning in EBITDA services start that to business reiterate today's approximately guidance, mind incremental little The on we're $XX segment from adjusted when our that our we contribution $XX press outlook our million pre based we to levels on XXXX segment. and as noted pleased XXXX Keep in March year,

expect based labor is on While we seeing -pandemic will veterinary we markets pre it return to are do the levels assume XXXX. return the not we prudent believe to to occur what in in eventually

continue be a driver believe services growth. long-term will business EBITDA sales We and of key to the

the dislocation in we markets a in plan However, slower normalizes, labor until ramp on clinics. pandemic-related

disciplined we to allocation. take a approach capital more As

million $X season, our modeling As company are which continue XXXX we Tick sales we quarter and of strong shift the sales, normal to for quarter our than the XXXX demonstrated reflect XXXX that quarter. month our XXXX, April inflated the of the a seasonality customers have and of the the From start business, start in to XXXX updating confident and of at a in despite and services in in occurred the our of strengthen net second due perspective, the are will and the orders to outlook guidance first in second the slower products causing the inventory headwinds of timing labor Flea levels our from business. growth in XXXX achieve

last the assume and a this guidance sales we sales, seasonal experienced will trend However, With million. in normalized beginning our to on quarter second this of mind, expect more second-quarter net Tick approximately we week $XXX of Flea and trend April, our continue.

introductions at a QX approximately million. adjusted adjusted QX than adjusted of percentage sales basis of second expect XXXX to new to approximately We net growth assumes two of points EBITDA $XX XXX an XXX accelerated of investments due manufactured to and to million incremental marketing continued $X with of points as higher our help EBITDA be the SG&A XX.X% our basis brands. expense support manufacturing quarter brand

For compared net the first XXXX, expect performing approximately XXXX. half of first sales to the increase to of we X% half

for year expect of and mission will smarter believe parents. Michael, the options the growth pet visibility net weighted we Cord, growth for optimistic and towards Operator. third growth questions. We our I sales second to about delivering closing, with efficiency opportunities on are beyond. as the quarter. we pleased in continue have our of our your and XXXX We execute team to XXXX that start remain be half the into and for available Susan, our most in are In of continues to good With our

Operator

for star we'll to a speaker time, your keys. question-and-answer session. before necessary For indicate may Instructions] is handset please, the this question equipment, tone hold conducting pressing moment, [Operator the queue. line questions. A At we confirmation pick using be to [Operator in your while participants Instructions] up it be One

Our first question. please Jefferies, question comes with from Steph with proceed Wissink your

Stephanie Schiller Wissink

understand little manufacturer by would want in But change your Thank a in as wanting be wanted afternoon, just bricks-and-mortar start about portfolio talk versus helpful to in with online total, on for you. channel. a your any bit brand well to business that if of We specifically. mix you question Good to everyone. about

Cord Christensen

voice. today. Good Steph. us I've that? you Michael, to Thanks, would like Michael hear your got Smith address with to

Zvi Glasman

you can Steph, Hey, me? hear

Stephanie Schiller Wissink

I fine. Yes. just hear you can

Zvi Glasman

Great. Yes.

one launch e-commerce partners I that of e-com thing ship much because NEXSTAR to channel. quite as stronger results So a that a our much out versus both strong we that of did pipeline The business not our be brick-and-mortar percentage brick-and-mortar channel a works in is where support would a to for -- see brick-and-mortar we there's load. a and continue unique partners will like strong an QX have way the a and say that brick-and-mortars in our

when So but greater a probably we're at look portfolio versus for customers. the look And our look brick-and-mortar we we I'm better channels trends share customers to gain shipments. share -- versus see we both healthy when gain we at in consumption shipments, at the e-commerce consumption, in seeing sorry, see

Stephanie Schiller Wissink

in know about go-to-market awareness how to innovation or innovation. category step-up about marketing actually helpful you're mix my marketing is to the your question, way thinking talked you and second strategy a of Zvi, got But I goes second it own generally your That's really some think in for any some and there quarter, you've about uptake? are you where driving

Zvi Glasman

-- let's sorry, Well, Cord. start with

Cord Christensen

a to I leverage think margins take at to And when those Steph, We've our we've performance. We're normal brands spend XX% we guidance has something happier EBITDA programs they're of for to that back in forward adequate company [Indiscernible] generate, initiative, and they a from customers support bunch decisions going an heavier as and you an Foster and those be leaner the in variables, we margin the portfolio started NEXSTAR in our the have or depending over and make and that's When we room brands of grow. as NEXSTAR years the out we us their incredible gives that our XX%, see to it matured amount we a that contribution profile as our are a on taking quarter-over-quarter results. will should we couldn't existing gain placement at then stabilize and idea, our and the first-half launched margin the similar brands was consider we accretive blended year, And had and make customers that level. place. hope to into good the support and we ample different the margin new pull consumer to DTC seeing back performance. for of we those at the first or out at historically like efforts the had This about across very support on specifically all get performance significant did because share all the us it item of the we've very the at typically to at the virtually modified spending significant of And year, I consistent see sales of and rate. got, for we with brands, continue workforce. awareness of getting important item sure we've doing distribution.

the out and generated the for brands quarter, the as in aware for of the perform what back those have could years spend otherwise company. that's will company think well, without you the $XX categories $X eventually stable get be and our and nine of million putting asking guarantee very there about. brands specifically hope that's those accretive marketing. to marketing in the years I really in talked we was launches. out out investment incremental then product were So we new XX% brought in million in it's an kind the very become been of profit the line second that portfolio EBITDA sales success existing or money We're that of That's into about, to

Stephanie Schiller Wissink

much. you very helpful. very that's Yes, Thank

Cord Christensen

Thanks Steph.

Operator

next question proceed Wilbur Elliot question. from with is with Please Raymond your Our James.

Elliot Wilbur

Thanks.

Cord. for question First

of some mentioned distributors Just you you've in that the the from business. if over which the you increases in about current all price that surprising some seems inflation the want or has past expected bit distributed little I seen environment. to lines, know hadn't of previously along context the quarter? the Wondering that the ask it trends manufacturers price a along you changed line had

Cord Christensen

changed time Yes, which customers, than through at now for some quarter we effect from our be come timed and same but effect to of delivered those we they over onto increases we've have take they the did price that increases them, past some price have are us. had in the

across brands They compression the of gone much had them price a margin some And of so on is are conservative profiles, margin will I seen. and say XX% to in this have philosophy price items. based economics you opted some we've higher increases XX% pass versus are And through margin those market, brands taken time take where increases. to situations increases. again, would some they tell of we've it's some they normal taking have to to more carrying of -- points pharmaceutical the than approach more mature, the the always reading during the the these economy their I

just their And stay current we've say seen portfolio in price described, price increases. half, healthy half about would consistent receive category of which structures. I other pretty So is the that with our I

right us standpoint. to a years, it's so been for over just we've or from operating risk normal those no XX part portfolio perspective, and pricing Again, a So inflation through passed and procedure. now of from natural are that and doing

Elliot Wilbur

gears it and pets I on questions which you model, at bigger a that KPI services record to well. starting how here in clinic and dollars has And there's the are the little clinic of site think just levels provide we're commentary share obviously, of Maybe And do shift significant sort looking And of at net to the the the lot flexible, do picking or should up trends, guess, segment to a the if clinic benefit, and oriented, just value with to could overall been vet some picture bit labor play business, I locations. thinking you at per think in is most terms growth Okay. you about in slowdown about these per of quarter inflation, reporting year-on-year, what on call about in more bit color margin near metrics. still general market? performance fixed trends, should some maybe traditional want more a clinics of trends ask impacting spec to a think and how of based within same your your how as those in you respect a then just sort terms we perhaps see dynamics of you data just factors little time services then vet least fairly sources relative or of business the vet thinking couple

Cord Christensen

appreciate I the It's Elliot. a question. question, great

XXXX I XXXX, says guys think way report rates we due as budgeted XX% fortunate year, [Indiscernible] and cancellation QX we rate for a going XX%. about along of from cancellation that had told we're improvement saw to the full through we to rate we're issues XX% we on. that or a We saw this in you like XX% labor had the around year same cancellation where versus budgeted that more

we're year. pets KPI a our last per last this the year we running is year centers our getting and more are perspective, up on From XX% So than work year-over-year two better. from clinic were full wellness doing pets running

last actually our And we labor. pets also Our is the which our we up full are had think what to community seen take have what year. increase XX% pricing two cover and is over that also price in is line with with had running is increases about to average take clinics ticket most cost I more, XX% a to we've

of taking it's I have where preventative lot longer it's of we're are down that where slowing figuring services in very that's what labor, people so all there do. is you up. choice People we understanding of time We're up, we and lot tickets have focus pet up, they that for they the out we open. of have issue we complicated count's of it their procedures the you tells care vet are people is down I basic option The and have taking and really pushing in vaccinations a think away are very it's stuff. things the channel a minor doing. and And are clinics emergency-type [Indiscernible] think the commentary the taken read they easy narrow that so out

number very -pandemic So really is with the what went And still we this versus XX% a report year wellness and the though a the we of still centers had business Even right were went being place, we feel that we're number, clinics gaining right good, core and of our pre in we're we're in clinics our we're run. more running, only where time to XXXX positive up, what the model. negative down year negative because run last in level. base to from

So continue we needs made the We vets, for there, to quarter million think right just more had right more the recovery indications expected than quarter. better model's need more all the expected, are we $X than that for place. a to I in we're business And in hire get the and right what because consumer get clinics more out and time. the at we

Elliot Wilbur

Okay. And then Glasman. one last Zvi question for

for outlook back from call respect the cash flow with last to operations. to go your Just wanted comments to

indicated you think had had record a you I expected year.

after maybe and stand in Thanks. on original expectations? And inventory things trends quarter the how commentary your some versus wondering quarter? receivable specific Just first just

Zvi Glasman

of to million We of to track. were going year. we're cash project, this on We we're $XX $XX flow last million Yeah, cash $XX about year. have million negative positive flow

million year-over-year First-quarter, capital. working around were flow $XX we cash up all-around and

to here we we today, sit $XX still as So to expect as $XX flow. be million cash million

Now, eventually newer of as investment the current really the there, shifts cash have but cash the about feel note the as And cash-generation. good if but about big working capital, year any you course, think variable we is we of that in there's of flow. bit of term, in fair business in would longer potential to benefit a flow generation we the moreover,

dollars wellness back of what For centers. XX-some example, we're million adding

EBITDA the $XX bottom line. pre well we we're the cash so The knits a that's centers that's clinics, potential for pleased million. get community levels, when with and the other for eventually -pandemic couple flow as So to to longer million generation wellness to as $XX year, over stabilized, we the term. flow cash And returned community really another more this

Operator

Andersen question. your question comes proceed from with William next Blair, with Our please Jon

Jon Andersen

seasonality in We've What product lose or And let's I the from wanted first shifted? of to you're the caused do the change the seasonality what about thinking late season a we about Good similar is to late on start. typically cover. the implications lawn the bit you How we in the talk for season manufactured that April? that? starts afternoon. say, some little that a start drove does, it commentary comments Everybody. ask year. that and Could more garden later typically business or it when than the heard you

Cord Christensen

patterns. week watch And snow to be a And And of Jon. again, lot key that in just and snow we a people of all couple Charcoal, the question, matter for I in seeing had going New it's -- Lawn the the what the And expected. Garden. April, were up other in recall the of if and a seeing of month of or across think general, slower through in April York, our days. even you weather Chicago, were inches four was third even in at offices and saw country we the to three tied and we season weather I us a really I of Thanks to would start Lotion, Suntan think of we categories:

the weather we spring spring off category season. Just typically sun this the the is get that that kicks get. didn't And

treat out doesn't And And in then end the use year-over-year. as if A it they're happen year it lot to on that's it year. it of the one that going the product customers themselves a rougher person of boxes what every found sold And so buying of up a be would few -- last and very in opportunistically weather the doses of the person June, in need little they average. may someone those the may that an July. there's the last we've for April, on and that happen more years just using that consistent bit single one We've this these number typical saw boxes number to at was been seasonal business sold April. uptick We a April, did and a the and May, over line in with days years week that is this there's and last they mountains, X.X season, see is in XX season. for of shift in that's the month regimented the

recover typically And so they buy, when those sales. they

out said So based to that trend should we guidance of past the we those and to because to that full-year but we the believe And believe season, what meet years think believe we start at in on this history. weighted we've I the our that the we our is do the will end middle recover intact the guidance, be to put need sales it'll be we based on season. guidance as of we over season, there, it seen continue more of

Jon Andersen

E-commerce think it's launched Okay about I the that's couple club year. think at and you mentioned year that I talked Could already NEXSTAR. about these. I talk focus products you're at because a that's revenue million has of premium you've the of to with of I that's to supplement supplement club store, the Could seems wanted the new you've you things guess it big about helpful first each year. a other guess $XX the seeing contributor I second because the initiative like this which ask in important kind premium sell-through being From about super of thinking this half

little progress. Obviously, wait because terms again, a of the little distribution. terms color kind early there's of is whether And a provide of we're of see. and something in even other So year and in it a And exciting that bit bit of to what what real expecting like that and evidence half items? more any innovation. initial you're seems going on second could seeing to you in But two reorders we're initiative and these detail more sell-through terms have is in

Cord Christensen

years right have right pushing the hit just get some ideas and you and that. the all innovate think always we're customers you I with from and time support deal to significant your

source would is true about million of full volume our not from about about for gain year, The we deliver first $XX new ourselves. what from as for which will year budgeted or we'll line the company. million of with growth, in And year. tell insignificant, to $XX total about line will you but the the a this of growth, $XX $XX believe that the initiatives see million net all top million that the XX% to see we contribution commentary we I In

closer Smith Michael that. I'll been Michael performance, let way He the person the been to that is of let performance, measure comment As with to part far comment. customers the dealing as has has so that that I'll on

Michael Smith

have we've That chime in, Yeah. has Happy that premium warehouse built also that read you better the they're our still that event super how doing a the not we've our to if period chance back excitement come. to mentioned item efforts to and and see activation one we I merchants program time product have of member proposition rate now I'd not one driving largest announce now large think that out perceived had of the is is chance trial for from its what or of of say to been the only push first That But the as club biggest on in that in together. happy item run slightly terms with retailers. QX. established of will to yet expected, the had where the the half we a we've already to item

hungry and to innovation. love the the pretty in and the customer. got Flea and we say a partners the being stellar same ultimate still of proposition, couple NEXSTAR, yet have the we categories news that's to I been engage in they're the of yet meaningful for early the some the our merchants Tick retail of plans in that strong it. quality compete On They read, and activation support innovation of terms would very terms We thing feedback in new in. engagement impact one then that So big from

support for weeks. been and it's in initiative hopped jumped to really market on they've board six So four the now, to out this technically

large month May. big Our then AMP two the in investments of promotional ACV we hitting end have push our with have first at the and to three our major coming store along over weeks, in this customers just count probably last

it's the have to customer we our still early say would of things what an too support that proposition, I So partners. immense get from a retail great favorable but read on

Jon Andersen

was will that the Great or XXXX or can flow ask is you've longer-term, since guess years on to that's something do longer planned Zvi. expect think I a is little guess you that full-year a It's out. helpful. to basis. be one I few address asked positive you extent should And this years you since free about way. flow different bit a we in I in I couple for really cash you of -- positive been maybe earlier free been This cash

Zvi Glasman

Yes, longer-term speaking higher million numbers this was was 'XX -- I and of to levels forth. that speaking flow so and wellness is with we returned $XX pre million the our cash would significantly potential the as that to. in to being build out $XX I free to centers than positive -pandemic

Jon Andersen

want it's I just you sure and Thanks heard be good and with correctly. Susan, so much Great. time and to I good luck, everybody. spending that in conversing great the you and been with Oh, luck future.

Katie Turner

Jon. you, Thank

Operator

next question with proceed Chappell Truist Please Securities. Our from with Bill comes your question.

Bill Chappell

Thanks. afternoon. Yes. Good

Zvi Glasman

Hey, Bill.

Bill Chappell

then that quarter-to-quarter And maybe in the this it might've that went But some pull-forward, much of EBITDA that business? on how more and distributor Is -- covered. product? happened. $X been of million with terms own color your business the move? a why Just a Was

Cord Christensen

Yes.

having $X -- [Indiscernible] bring it's to negotiating the the fall. in is, The we resets mix inventory brought tied product accurate, that in thanks, was Again, going is and size products reset for [Indiscernible] towards we of do the Bill. in expected to implications that in the back ourselves launch, $X heavier the literally million, forward as the we're our that came seasonality the estimate we of that the retailers their load So EBITDA and million. own March. when QX order But we typically, margin meet I fill NEXSTAR are that And is The of into biggest up source came to of on business we ship significant shipping then in it's ended it's that up because the to when quarters their across April a lucky. count levels seasonal inter-company part the are, change, order And that well. was products. needs.

Bill Chappell

-- just the then on John's And question Great. seasonality. on

sell-through too little commentary you overall you've missed because is of or seen just have month So trying the it the per improved, so March mean, consumer wasn't expect month that April, I can lower do be it weather your you has a I mean, an update? just you to in May bit from takeaway and give pickup understand -- the like early us of to I'm as or a se bad?

Cord Christensen

Yes.

direct consumption seeing we also the inventory higher place. of and and have built was reflection consumer the typically month means there takes as quickly levels didn't see the efforts April come out that not we did that So not just as the are reorders historic And of expected. that consumption

of that return the picked normal believe change a of units accelerates. cadence up orders recover place you'll days April May. in in see did efforts, of kickoff look million we week to sales We so see see doses took it efforts, the that last of and historical few those up see we do When to was the about $XX to usually a April and you and And we it season the fully. And and hit across still the season quarter. month first we the pick our to typically, the once at

guidance in still our guidance normal recovery during that And season the took impact season. doses ability of company on involved assuming our the the place that history So the into total the what's now and and full-year of those those season we and in we'll But with we today. again we're the rest normal as run past have left back to be April years reflects speak consistent and ourselves and that's at update that budgets. in units guidance based the the

Bill Chappell

Great, thanks the for color.

Cord Christensen

Thanks, Bill.

Operator

your Benchmark. from with Our proceed Lawrence next question. question The with John Please is

John Lawrence

Thanks. Good afternoon, quarter. guys. Congratulations on the

Cord Christensen

Thanks, John.

John Lawrence

into through of what's the bit? a obviously, just you generating continue better little fall last the you do little would the that that And just Zvi, a would maybe year? happening what's And bit, talk a would you profitability couple about in made to you changes expect minutes -- that spend that on business, items help happening little a to those side Cord, EBITDA dig line there? performance and you that's services labor

Cord Christensen

all have to summer positive had of the have would but having that to no G&A John, last think performance a to bills covering with year the having projected I and not contribution the full-year obviously EBITDA essentially as we support necessarily visibility, company. us performance business,

efforts us And show more if the so we staff the people schedule, optimize -- many staff as we a ultimately, taken do wasting is have First-quarter, there, have reduced money. we have when the in seeing wasting up just we not and have have has to it. allowed not we're to veterinarian allowed presence, and where workflow, we've times us optimize our Veterinarians

it's in really it about right this just environment. getting So

issue. them let think know people we the optimize tried at message the hired core to we people is I we XX close had use of of we it centers. vets tell to permanent unreliable that XX existing when we and temporary a That's gap WX fix reliable. us is in and to where that that a it we get main of now, That's continue labor lets more

hear and XX% you doing we are of XX% stores the on the centers so from XX% cancellation well. and we up up to XX% XX%, of average And versus XX%, in that us up the on and average tickets rates we're quarter, things wellness run the are ones and XX%, pet the counts the we're the running doing allowed when to reduce efforts the took

playbook improvement so clinic -pandemic going on. lots pre and just our to but getting execute just continuing it's counts positive And back about to continued of

John Lawrence

the Great. good Thanks. going all forward. Susan and help thanks luck for

Susan Sholtis

Thank you.

Operator

for of We turn over closing like I'd the end to the session. have to reached the call management now comments. back question-and-answer

Cord Christensen

the so saw and quarter rough how us we place. saw joining performance than starting with season put guided start that, to our more performance margin, the effort April company's good this we place those definitely in obviously, in sales market have better expected which guidance the and year. with sales feel as very first-quarter positioning a very our on Coupled to has exceptional everybody after what to reflect recapture on performance had Appreciate we but EBITDA, the feel late, for good and fortunate as us we we're in a and get we plans have up an about had allowed time condensed to today record season to and the full-year to our

of coming lots PetIQ's great a time message the our pets, products to times. model have the and opportunities for in which looking investments help the steps the at low-cost fighting people inflation, that's you economy towards provider marketplace, save at valuable option has never about position items and new that an price. right should have well-positioned new right provides believe economically service, the we're exciting much we We as our the stronger money feel growth especially Being to be marketplace now to than strained then for right see make with quality same we major their support same a in health lower the and out when of care

consumer And numbers And offer reflect through thank a year rest And look hope people, the employees, we Thank very just at so all here those to supporting the company to shareholders to the of great that as we our have again. PetIQ. us thank of all responding you. And you the in you we results. performance for PetIQ of time helped and this time our in talking soon. our deliver as forward our partners the

Operator

concludes today's This conference.

your thank disconnect we may participation. You for you line time at and this your

PetIQ (PETQ) 5 May 222022 Q1 Earnings call transcript