PETQ - Earnings call 4 2023

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Operator

Good day, and welcome to the PetIQ, Inc.'s Fourth Quarter and Full Year 2023 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note that this event is being recorded.I would now like to turn the conference over to Katie Turner, Investor Relations. Please go ahead.

Katie Turner

afternoon. Good conference you on and earnings joining full webcast. and PetIQ's XXXX year call fourth us Thank for quarter

implied remember Cord could Officer; of laws. the Securities Chief Zvi involve Glasman, Christensen, are and on begin, time the described we and today's for please Exchange uncertainties reports time we'll detailed statements Form to and this expressed the release the management hear forward-looking today from and of statements a today.Please refer and in materially any discussion Officer.Before to non-GAAP those to may prepared forward-looking those call, For that on based from risks in Report Financial measures. course Chief remarks, from the company's call, differ Executive company's results that and will cause note Federal statements.Please actual refer during these materially from management risks within statements events on with or made of to beliefs current management's could other make and financial issued certain the or differ Securities forward-looking actual XX-K that the press filed These today's expectations meaning Annual Commission

non-GAAP information presentation the the financial to to Christensen. for the to not investor GAAP. is PetIQ's over a most provide and prepared in measures release accordance information of of in measures please supplemental measures with accordance presentation.And website as be these for will reference considered financial company today's comparable substitute isolation for the to to GAAP. And call useful for believes I'd this that, non-GAAP financial presented in or definitions investors, with with While addition, Please refer a like information in a intended Cord reconciliation the turn

McCord Christensen

and We joining Katie, afternoon, XXXX results quarter financial for quarter with I'll good you, and Zvi you full-year review the then outlook. today our of our better-than-expected results. will everyone. overview highlights, financial begin appreciate us key to and fourth Thank discuss an

questions.The Zvi, in our in million consistently we XXXX and billion year of XX% record our Finally, than midpoints year, million. to XXXX, increased will compared EBITDA proud report the on billion better $XXX net to team the and that the and generating expectations, adjusted to $XX answer prior a XXXX the our started our sales finished anticipated.When significantly increased net goal to $X a XX% based $X.X to guidance. after exceeding Michael, I approximately over with little I'm of quarter be available EBITDA of after we sales quarter John adjusted

to our higher favorable expenses contribution, free and led record profit to Our was $XX which to times of fuel of net we of strong $XX.X XX, the I'd projected. Product the as and importantly, cash the costs a growth X.X cash record XXXX total sales brands. leverage than million And XXXX, to helped million, our net much stronger-than-expected million leverage power $XX $XX.X operations flow PetIQ's million in annual of portfolio and December of from low finally, emphasize XXXX.Looking our and like segments most

years in category. of tick the discussed channels As one you over-the-counter flea in the for XX the XXXX, combined few had last the seasons sales for quarters, all strongest and at last we we've look when

XX% the the year.These in team. are results impressive half our of of that market our segment advertising enhanced Product more, on an promotional share. our on entire growth For in the strength brand, to demonstrate more planning and we to we And online continue categories execution sales growth capturing returns spend XXXX, increase PetIQ as and our told for our PetIQ's $XXX.X of building net of brands We Across even compared plan the by brick-and-mortar million, growing increased the to which We were while net brands, significant XXXX. second pet efforts XXXX. manufacturer sales disproportionate are amount the retail, marketing and XX% exceeded see that at of are expectations great and you recall. evidenced in

of spend on QX in marketing, recorded we $X communicated the was Midway million. we an which of million million would marketing we Our $X for that XXXX. budget XXXX incremental $XX year, through

in So told our we $X evidence brands Services Included that this last the we our investment total, team outpace review spent from to this cash have funded $XX on $X long-term support the payback from be on continue our of optimization is investments brands. incremental which $XX in support spent of brands.We expect segment million and our prioritizing in will million and longer-term you our drive success that earnings expect efforts we XXXX. call of the will initiatives this will an operations.Our expect the into a growth by We guidance, market XXXX, beyond. remaining the these to XXXX. beginning Zvi coming and adjusted we to million we of million for is in to savings to fund top million $XX expense, from lean expect year to for XXXX the

product in discuss to our more Now like segment detail. I'd

and product $XXX.X QX growth compared the broad-based was In and XX.X%.PetIQ's XXXX, to segment category the in contributed results. at category year growth the year the broader continued disproportionate tick to flea a online portfolio million, this net our market sales and grew evidenced PetIQ's categories. XX% increased an outperformed by positive of as brands of fourth XXXX, of XX.X% amount The across prior all a period. dramatically quarter of of the of share Product increase For capture the brands QX

XX.X% tick XXX December and For is of prior quarter.The Most in captured Pet has weeks ended tick dollars, unit driven now we basis the by the surpassed largest compete the in. up category this XX the share Supplement the over growth XXXX, now trajectory period. flea the increase its maintained period. Pet gaining over an XX.X% growth gaining points represent basis picked of has versus year and supplements also over-the-counter of year category category more category. doubled than over-the-counter and which brands flea category quarter, the fast-growing as X prior the share years PetIQ's that XX, for This was XXX the we last

in compared to XX.X% accelerated space period. grew prior to pet XXXX, the the our quarter supplement products in of and fourth growth continue Our offerings year where consumption plus see this

QX. team months. providing the performance you on a dental grew details the In outperformed us Roxie brands brand plus coming trends, and a are share premium positive & our strategic pet basis pet rates the quarter Minties half along treat share share Remember, in and of dental well of full these treat in projections. confidence Minties Roxie yet, expected the to for Stain exited better to more supplements can and gain category look look believe outstanding & & category.Recently We brand well pet Roxie completed newest of to for brand excited of states catering at to times supplement to Roxie XX% in years we Odor growth treats The in first as Rocco we pet QX. non-core PetIQ Luv is brand the also QX Rocco Odor grew continue that a focused us. for determined XXX% in XX.X% the are Rocco ago.The for expand XX full QX. are under And the in continued the Pur the brand penetration addition, need base two versus gain premium our and gained not for growth strong of its quarter we Rocco both double-digit and continue & important also and to launch leading in other product posted ahead The year about a category, household several Luv premium and grown like expanded pleased and executed in of we've that thus this are growth a it supplement category. category, XXXX the Rocco & offerings Stain the meaningful the and for should portfolio, and about needs to Our momentum products Pur have very & with continue positioned Rocco forward the tests parents & gains. fit very offerings come product their grew than many on give Roxie, fourth well core offering encouraged the Roxie We product at our categories in to success our at were The end to We in very business far. the treats. year.Our has brand's XXXX & points

about awareness promotional we offerings build next pet increase consumption of several to investments For excited increasing over we the Rocco brand and and years. advertising as & premium XXXX, Roxie's are distribution

remaining the margin segment prior basis, segment. X% approximately Now an increased profit was On period. $XXX.X compared segment XXXX, to showing revenue dollars million gross to revenue XXXX. the focusing and net in centers Services of the decreases for right XX We The increase annual to $XX.X includes Services centers million, in XX.X% on QX, in Services wellness XXXX, the efforts. compared centers QX this profitability. the to improve And for closed of wellness the total segment We an business. year net XXX XXXX optimization XXX in wellness QX with operation. and ended We this is our half decision due in XXX to second believe our future the

to to investments helped us return. Our the of rate expect achieve our highest have better we optimizations in where the of align business our areas

the of a learning services, hygiene with testing remain pilot as and facilities employees pet format headquarters, In in our Daytona, go everyone on like closing, strong in help center the care. and to results. services about offering achieve existing partner that PetIQ grooming variety Omaha, veterinarian and services I'd retail We for states in options in located well. XX our always as to and including continues We our new XXXX. this collaboration thank together veterinarian well optimistic and are Our a offering our to annual offer an Springville wellness our us

veterinarian overview, products pet and and consistent our our wellness provide well Your and the and the core to on success. commitment pet convenient now services.With mission over to robust turn smarter, work and tailwinds XXXX call to With and strong in values for industry beyond that to to positioned we are more Zvi. health creates capitalize dedication, I'd culture affordable access like your

Zvi Glasman

XXXX. We finish the company's to Thank pleased you, Cord. very with strong are

and our half of and product growth broad-based sales in an the across of reported Rocco net XX.X% record We've evidenced increase compared we and as and the strong $XXX.X by Roxie.As channels sales steps our quarter fuel Cord opportunities guidance. operating year, had success into and to capitalized growth important on for marketing and with the of detail finish make strategic QX & our increase last of of mentioned, our XXXX million, QX strong categories. PetIQ portfolio beyond.I was in the team in second year quarterly driven reviewing as more addition growth sales and million now XXXX growth segments both will XX.X%. by full-year was brand financials we the as to discuss quarter our from the investments well in to and took planned first Our of XXXX an for efficiencies gross $XX.X Products profit adjusted gross margin Services Adjusted increase and fourth

account, segment for approximately of or not Services the points did SG&A $X.X our flat basis we inefficiencies essentially a adjusted our you QX cost at drag be last XXXX period related that quarter. included optimization and compared If million the in take quarter compared into gross adjust million year. to to adjusted profit year was fourth this $XX.X would million the in $XX.X XX.X%. QX adjusted XX Our prior margin gross from

operations sheet of so and expense related provide in the charges with restructuring to planned marketing balance manufactured fourth we the included year expenses I press the our release EBITDA of non-cash components from cash $X company million The the and the segment of cash of We $X for and business million points of free a As with also table primarily relative a our optimization of a prior as generated included health planned period. costs $XX of the for and for for $X of $X.X our expectations $X growth you majority flow partially million. were $XX sales, cost be purposes. and in equivalents million were the less financial This and continued Adjusted below a to EBITDA was of of the optimization to to prior.Turning $XXX.X adjusted quarter XX charges, of restructuring XXXX well net attributable This of of to fourth by XXXX. the Adjusted includes in $XX.X quarter to today's for decrease our in XXXX, initial million million expect was XX.X%, quarter fourth excess million million. $XX.X expense $XX.X to over initial history million provided increased was the percentage implied the we associated The the quarter. We company Services services quarter. million to services of the was the company's QX incremental portfolio.Total guidance sales long-term support million. to in ended and a the modeling result which of of of compared cash in marketing cash restructuring cash record currently of for the exceeded our offset $X.X total generated expectations than of of approximately $X.X costs last SG&A And million. cash leverage highest liquidity. approximately million improvement the of brand XXXX efficiencies mentioned incremental quarter with net million expense basis $XX

For flow we debt, comprised convertible term of expect million and XX, to XXXX. our as our The of free $XX to as cash million would cash debt was define additional facilities $XXX that and credit availability no XXXX.While which borrowings, liquidity our plus flexible. company's liquidity, on ample undrawn. of of $XXX.X we intention hand is is million. its capital Total XXXX, annual is excess was loan, hand, have debt total on cash making company's December addition we leases, ABL generate million which of $XXX.X In December in as the we note XX, are ABL,

XXXX, leverage, expectation under the times, a X.X than at calculated XXXX. end of terms record credit of low, better our much for facilities was Our net as our

and XXXX, net leverage for low, calculated or better under from was XXXX, times, record terms Our our a the net facilities in leverage than much improved expectations X.X X.X end as XXXX. times at accredited of

is Looking the in our mind, keep of leverage ahead, QX highest quarter year. always

XXXX, due will you season. net increase for So capital, for seasonal our tick of us to working increased bit see timing and changes potential inventory well flea a position QX to primarily the of leverage in

in on of guidance. relative ratio year-over-year to an our turning net leverage QX However, year.Now, improvement expect our we a to basis, last

patterns sales to adjusted midpoint. X% An section section expect posted million, today's the XXXX. Investors year I expense into Cord record on net net mentioned, EBITDA a midpoint, on XXXX approximately in and flea have XXXX. & adjusted marketing X,XXX the an adjusted expected just outlook presentation an our and up based a represent compared based the seasonal approximately three account, of XXXX on as step outlook $XXX more items XX% foreign broken million in return $XXX annual on variables these increase sales inclusive sale XXXX of compared earnings the would approximately significantly As an of of EBITDA an Services Inclusive we which quarter you optimization, the in basis.If Mark stated the the approximately subsidiary reference includes total is of These of be to in EBITDA net earnings and increase $X release, XXXX the in growth million million $XX of for segment as season first to mentioned. or of X.X% the approximately take million full our in the XX% sales higher these today's increase increase of of website. and out variables of experienced million, normal $X,XXX and We company's tick to a Chappell, to of our

launches in approximately annual sales based the XX% first be first can the sales net of $XXX to our on to activity, the net and a seasonality other expect of half number increase recorded net of XXXX X% in For of midpoint. this approximately vary versus an sales of quarter Annual on we we XXXX, XX% million $XXX of million, of shipments, midpoint.As product million today's projected factors. an with Adjusted of X.X% EBITDA the expect the in of weighted promotional based timing our period noted to $XX approximately on XXXX. release, annual based $XX to increase million,

for number the year will course factors, regarding to share to the going of on our the count of mention forward, This quarterly purposes, during that Additionally, depend including notes. wanted due company's rules the a vary modeling will convertible we earnings. accounting

strong million count calculated have shares the note will EPS to theoretical the count we of report our same financial share X.X shares but certain by based we on on our In record company's increase. convertible obligation the reported the approximately no are closing, currently with XXXX, in be results. required will For increase satisfying intention basis.Importantly, diluted quarters share XXXX and

growth Our operating execute fuel increase continues and efficiencies. to team strategic well to our and initiatives deliver on

and Michael, now are John as to pet expect smarter, on for your XXXX, Cord, my I our we and deliver wellness and health financial parents.That concludes all of increase available questions. convenient review. Operator? mission value affordable we stakeholders for for For

Operator

begin from go question Parikh Rupesh We Please first Oppenheimer. comes the will Instructions] ahead. question-and-answer session. Our with [Operator now

Rupesh Parikh

my year. to a question on taking and the for Good congrats Thanks afternoon. end also strong

the where the biggest sources achieving risk hear maybe guidance So time, love and the look at starting you of where guidance. upside guidance with just the do see range range. see you We'd out just you at to same as in

McCord Christensen

M&C same the had as so big reception the a our season we upside. consumption, last right. company get products year, a we items for our of question. see the see talked the once the Obviously, and and to easy million it's year. The and the appreciate to a comment we discussed the always easy. really we and about if The and which off placement. really thanks, very business. that have great that's And We and Yes, upside are $XX of had the stores flea we we led the a and we we which on of the source closed, it's into average strong weather, retailer for the for sell see was. how start and tick that budget thanks and year We Rupesh, it did great an source opposite, strong promotions season, at that's rate. talked And year, to about We we

we've very where things good capturing is much go are. at better think when And been stronger. we than expected, we So it

So know, Michael, I else don't to to you that. want anything add

Michael Smith

small fairway to into and the the this Weather for we No. is Michael. the this probably we're variables by upside launches both we assuming of as launch year, area very supplement have kind some in could that and in well. we premium have pie down are it Rocco the Cord guidance. reads. But biggest year. very do And specifically quality middle couple are shooting we expectations the that That tick we half and downside. seasons, piece think just Rupesh, that flea relatively of the Roxie a that see are I said upside the But that plays of be coming built line, it the out see again, supplement the of the the carve of up meaningful greatest early 'XX. & encouraged one variable, those which a We or our testing we would launch. the back meaningful out with

Rupesh Parikh

follow-up then question. Great. one And just maybe

how in as know guidance and there you of to provide there's gross some was for very about 'XX it So, terms I any what think is can helpful to well. it margins QX, we in about margins noise and with service think a terms But product as there's the of don't I explanation way get versus gross an there are. in to if know adjusted

McCord Christensen

exceeds if happy margin XX have, margin dollars. EBITDA or would margin all or more next gross lower gross conversely, we have And be dollars plus that we'd is think Yes, upside is Cord, we'd case, it have year, and higher higher a and we have We delivers in dollars. because our expectations distributed basis this a but a addition, me, margin okay. that's in we'd percentage, of

the doing And we about it. think to going it's So hard but in how -- don't I much we're imagine been mean, I several that's we've years doing better to than manufacturing, try. last

Rupesh Parikh

pass you. thank it I'll great, along. Okay,

Operator

comes question next with Bill Chappell Truist Please Our from Securities. ahead. go

William Chappell

Thanks. Two congratulations Good and well. afternoon as questions.

that was because with like, upside? maybe are margin on $X there bridge the services' are of you it sounds that. million gross reinvesting how and to reinvesting saw a help guess, to And that year? First, if negative to we how it add from gross from XXXX factoring quarter us in of year then what hit last for that of Didn't was million in shutdown, fourth in like I you What you're standpoint, savings. margin to the expecting you're the EBITDA this just $X know thought to all all I that actually,

McCord Christensen

of we're been that $XX brands is Look, operations. saying thanks, the we're million funding to weren't But be our half available to right, and Bill. $X to that, we bottom going step out to the are been other our consistently to push line your voice. that the increase. we to million that we've million million that and Good of take hear awareness on have $XX continuing saving would and it. return to Appreciate The operating All we're that getting drive if we that from to the the company is $XX $X stores AMP well. fund stores perspective.We as and from were did them margin, and worked quickly very investment. had going investments million that very and way. increase talked our And impact up the ourselves an with advertising going about to on losses associated we our and closed We've we've be efficient and EBITDA that our end-of-the-year along expenses grow the into those from going to that a had get pay have closed

any As place. to community at to push XXXX, services store, drag relates be kind it kind with XX XXXX. -- margin it would good open be change is a I think that basis I else anytime portfolio or a there? negative back right going part of And said, year, clinic we to have the conservatively place. should we process we community believe going track our as more. And our of to takes and of I forward starting been said, outperformed Zvi, we like points Zvi as is distribution we're good we're would and the But anything kind only on a that's more now, really all during be expansion clinics. that considered, of a miss believe to there next state organization guide of a and be new maturing normal

Zvi Glasman

X%. -- margins Services about down And announced $X margins. in QX running close an add not we $X.X closer million been dragged of only of I had in would margin we the would inefficiency our to wellness services the did -- that million impact centers our The XXXX that thing back would and add QX is the growth costs of so have QX.

And So you our year-over-year have that's sorry, bit about 'XX, on full a versus performance basis, an versus My if 'XX. growth. exclude million, look points 'XX I'm XX little QX. of for adjusted be we'd basis at year, 'XX we in noise if up that $X.X that we year-over-year, the bad.

William Chappell

Switching We've that super cushion of own do it. you your how company-owned how heard and just availability to I some understood as side? more year, se. that & certainly such down? going to of other that Any Roxie How is distribution product much and is XXXX? consumer way products the per expanded expect of kind success much on that premium products is that past into Rocco think supplement pet. of think characterize and you just Got you to this trade I the and whether within think is do the continue

McCord Christensen

that to do take you Michael, want one?

Michael Smith

We're had historically Hey, beyond. Michael. ourselves and that That positioned there's we two at categories. in components, look And and helping are Yes. healthy early more for us they how we've right? we're relatively grew if And sustaining a us. XXXX profile. you in share like very into moving of biggest up. the in But in categories, continues of continuing and in a we a of those maintaining dental us those is and yes, channels, is that Bill, those the healthy growth legacy the the marketplace that have categories of to brands single into being being forward. changed I brands in some of marketplace. to to tilt benefiting are will expanding some presence unusually getting and had of it's right, I for fundamental partners part beyond tick broader think an journey. competing But our XXXX, pretty would productive into those category, to in innings trade value very from and successful be ACV down. and kind say take Flea a And in is we brands portfolio driver where the And channel, seasonal health still organic and primarily new continue more healthy evolve. take really had there step coming consumers of the them of year some the exposure That getting upon of supplements treats, do think our driving our growth the some retail in based

William Chappell

We'll follow see ACV. next And that in up, just resets? to you expanded couple of the happens terms think with do spring months this in of the

Michael Smith

Yes.

over most and next six turning weeks. category to weeks health bit this back towards The the those those treats in year. us wellness partners of retail For of more little see in QX, see back the end the the we'll our of some a four of the benefit in year, later changes and out more major sets category, half we'll plays

William Chappell

Great. to color. Thanks

Operator

comes question ahead. Please next go from Jefferies. Kaumil Our with Gajrawala

Kaumil Gajrawala

might Hey, Good evening. it afternoon. guys. Good Whatever be.

expansion I The quick a is Zvi? clarification. point of -- that had said think Is on basis XX upside, for Just 'XX you you points that of earlier, gross what means margin. margin

Zvi Glasman

Correct.

Kaumil Gajrawala

Okay.

have growth 'XX. have, sense the you to, of the a course brands giving is the over amount? now have some kind that just Just have a the quite thinking marketing, are about that's maybe on set level? itself time this of going heat, of is. how or to you're Is the just right about maybe it keep right bit then traction, overspend level? how brands to clarifying that. figure higher worked the it Does thinking if a make to maybe you Just us You And about obviously context thinking the what bit right

McCord Christensen

And a of to think, Yes, this and ceiling, and our of been it I And We're But going acceleration we've, return a about When pull see are couple we up level the we're time to step is on so how responsible the P&L we we back we we'll like next the we year feel a the days there And yet. pulling right we invest. that about The I growing haven't Kaumil, spend last brakes. what is budget our and because very the over continue. the pumping do back, we've from been that think We're standpoint it.And this up, We It's been of ton hoped all it, of return of working. investment commitments it's it grow could and another to significant we've XX haven't right or to what works to we great kind dollars don't into that, to But the afford aspects see we're and seen, pull seen we and years. just step ceiling company level would of we like it and will. going spend hit we that until back. as found know This that out we've yet went is work. we've if seeing news we advertising good making. ratios. to feel days. keep a the spent ceiling, on continue balanced it had of working. XX the it's into

accelerate the balance what the to next up and our continuing we're think as to be, is increases valuable So protect very the step continuing a to the depth brand's think, just and I and P&L company we need frankly moat. we and to company of the width going and do to performance

Kaumil Gajrawala

Okay, great. That's Thank you. useful.

Operator

Blair. ahead. Instructions] Please Jon next question comes William Our go [Operator from with Andersen

Jon Andersen

update are question. of is quo wellness my things at status you of And the in bit for them level? 'XX. service I you levels have then like if piloted, one mentioned in in the you moving on terms Thanks give who And Good now of program you're how good more us a for one got of you where afternoon. guess a us a and focusing which a been converting partner large I potentially what had little Most those think, ahead the things the stores, going Services a an are then and with is how remaining business. but on or that Services? in their kind community Thanks. plans and on to you XXXX? have further There there give And asked. update base kind broader offering? positive expect of front, Are staffing three question respect we perhaps that rates We've an cancellation rollout Could operating there there it's head. I could news business, seems well, stand more the to in centers. have kind you do with clinic on

McCord Christensen

Thanks question, from the demand perspective, in labor Good clinic for have Jon. anybody the a is We The voice. bright from schedule a to spot company. pay the country the to labor a is hear that we the for business standpoint. better community rate right ability your count pet than and when

services not where currently through coming the last clinic wellness rates clinic the really one the And on already the think of our model. have facility, cancellation got the out, we've partners labor into this out lean we are So went wellness better sit expect branded And phase business do is in we there our we to have little of from from put going. why ability we part that probably with in it or what XXXX. well. community than they're that that of said there perspective. thought from the where that it brand plan.But like. be the count that model we can retail number And community is there growth centers to was and model business. needs It's hygiene I we're there it's wellness for of close expansion we our we furnished tests are that with that hygiene a that recovering seeing centers think closing were of have of to to We balance running. a kind those happen look work up to so we center revenue yet, or largest markets. not really because labor negative our it versus and they're we're with talk plans we doing testing it going close. balance that And best allow the and we're about have the that clinics and is and also to of be from the model, increase but really It wellness our and everything. way happy, the expansion It to for we that's adding are we as them. It's pet past be uses extremely would we're It it production And of a The a retail finish operate be we opening Obviously, We growing of to in gorgeous our it there the overstaffed built in It market. had a need quarter, plans did decide and that a We and quarters, partners. significant out was end We're last working kind our vet center lean building right left, challenges unproductive we've closures.The more flattish and what well. happy. we out stores labor so until we're of we're locations. to more kind starting doing the not the were lost we still open really up converted part QX model, we're when of announcing when to new have not. the

Jon Andersen

helpful. Okay. That's

digit. one the XX% breakdown of the it's help through a 'XX. is kind of I'm you're and just for kind that It's year growth Services, what inclusive it Can of think asking guidance mid-single us quantified. growth the of reasons just service you Just center for the creates Understand you more the more Product noise expecting? accounting given one on closures usual. headwinds they the sales there, than versus make And that headwinds

if So there's be growth that that'd segment-level helpful. you. expectations, around any color Thank

McCord Christensen

were if and better that's to step The still significantly the Services double basis. of about doing be we take year which in the up be -- in into line, feel and think great XX% our are distributor $XX success mid-single top in where a conservative normally I you're flattish growing that. on a with of same brands if is are looking be again, think be year-over-year where line we're digits is this comes to the is right think Look, think we rates our the the are Jon. weather to the right way manufacturer growth bottom we what those digit business based about talked of in the kind place do, measure Thanks, we're we the we low really exactly But on it'll closures to the should what into we because long term. brands through, that plans. going account what And seeing. than line, for numbers in and we XX% we're million

Jon Andersen

taking savings reinvesting you're closures And and opportunities. it from the ROI Right. the higher in

McCord Christensen

XXX take we and the all be the to the That's I $XX is option before, putting midpoint the getting more that rally, million to we're out of a business. where had out bottom some self-funding sudden momentum we of going mean, That XXX. and that million like we're line into $XX additional of AMP, said we're

better we're investing the the numbers We're had term. the long this we've time. row business year I for doing the for and that the speak themselves. in term. and look, a long all for clearly execution So right We're in getting better quarters think And four things

Jon Andersen

sense. you very Thank Makes much.

McCord Christensen

Jon. Thanks,

Operator

Ryan comes Please go Our question Meyers Street. ahead. from Lake next with

Ryan Meyers

thanks Hey, my for guys, taking question.

wondering investments marketing pay or then much of and that little into investments, baked Just about how are maybe the if flow the maybe of model, the and thinking can these you some through just revenue speak that guidance. marketing off seen to you've how a bit

McCord Christensen

Ryan. I a Thanks, -- Look, that's think pet person. you're

why been, right. all when in And we've spending given investments a our You the a things think to seen usual, think have are we consistently. have that as that's be ranges and bake on conservative thought reasonable as allowing better up so from into I us we midpoint we're new few Look, conservative the And than background, everyone's everything done in to all programs. the your that we've be Obviously, all year, ended test how barking year projections want I we've how into of we the our dog perform. the we'd business.

add, So projections. you our anything know want but else, Zvi, I there's to or Mike that's revenue been think all in captured if don't I current

Michael Smith

different make marketing the we marketing lot call funnel, of of what right. investments in Yes, you a parts

we've more will of healthy impactful, and more Some influence of impactful, in both. mix got them are of XXXX that near-term them a are some investments long-term

out more yes, of in but investments one-year than factored guidance, So, much of into intended our those design, a pay by it's to one-quarter, point view. are,

Ryan Meyers

question. taking Got my it. Thanks for

Operator

Our Lawrence go with ahead. Benchmark. [Operator comes from Please next question Instructions] John

John Lawrence

business, about -- the of down as paid over better think, we've changes this talked couple debt, profitability, where from the you've base all when and last Cord. good look manufactured the you've always and brands I couple of years, and the afternoon. years, out come business Cord, look Congrats, a you at Yes, you the R&R. the

et look continues look folding to cetera, down, what the else as like in debt that far As this forward widen facility does wise something extensions, you portfolio? capacity and as to or come

McCord Christensen

we we've shareholders. We acquisitions about we've we we've and been think paid, we along expertise, or we We've a it's the it. that question, whether from that it relates and with. and the happen We our aren't items, can acquisitions what's how on for the made us in execute Roxie the frankly, the we're lots can type think we've think for do on X that because can those with similar you that That's at disciplined to going the it's as create area PetIQ lot, you And X.X to very company. they know and substantial you way, consider take products, of execution. that we and guarantee fit we those and move very where going Rocco a good be our they fit, think to a another better, to and health acquisitions synergy go fit to in do match, five do can We're to can when at out upside plan, you affordable I three to like doing criteria that.I so & things continue three-year focused And we'd values at like, times that's out of we execute bullseye And be years going we vocal can new and been saw significant type deals become disciplined those. brands, paid on. something five-year deal, if but to similar value And do the pay our talked very buy you distribution, & to and wellness about debt But our hitting you in that assets continue there John. need we you know add pet it of our different now future. those look Rocco don't very we're to that add out, value on we don't and a the and we looking the execute substantial against. valuations and deals on Roxie dependent can can costs deals is the the to and what to

grow we use and into Rocco do without a that responsible to can brand But type fun and we acquisitions find to a the I with think Roxie continue we're and to just and just and more continue do really from. we love significant this foundation when demonstrate we So grow a like go really year them great going to execution, & better and cash out well. making did company responsible of execute with things platform can make

So I kind are culture. that's and think of who we our

John Lawrence

luck. Thanks. Great. Good

Operator

be line comes for from The muted may with Jefferies. your Our next Gajrawala go Kaumil Please question. ahead. question

Kaumil Gajrawala

terms on figure point, following environment. was I and Sorry mute. that. M&A On the up it out. about I'll At of in some

the that are changed prices at? M&A, for you're months, you recent there's of but sub -- things of some have some the So -- looking asking given laid on philosophy weakened out segments been some the has maybe in approaching your what pet within that

McCord Christensen

how know at we've don't that that very at had the our we've have deals, I we've get looked the that them. make And M&A. definitely sense don't macro that us. we assets market looked we multiples on we once are We're and unrealistic for still don't because and looked focused make they think for are at other we fit that company. into assets sense And looking

extremely assets they obviously going going There's those retail for health anticipation as a health to category do it so pushing long And that and very And Just as environment with it's time. would a the thinking.But significant there to as to say I really relates be is categories. not lot competition good be. like we're clean well we're is look, themselves that's deals. little in should are strong out our and a available not the that and macro growing. wellness you're really pet demonstrated to growth pet positioned be We've of

kind environment. we something And seldom. it where change that close the the I looking today, but all trigger that's pull we're seems we're and Kaumil. like say going at very, So to And wouldn't time, very we are that of actually

Kaumil Gajrawala

you. Thank Great.

Operator

Christensen closing Cord remarks. This I any question-and-answer back the like to conference our to over session. concludes for would turn

McCord Christensen

taking setting beyond competition, XXXX. approach company's conservative usual, that continues into an PetIQ distance for execute. at and and an as went very its all everybody, PetIQ a the to joining We delivering itself from support. XXXX XXXX the further but team momentum, appreciate We, and us gain all amazing you such to level thank the are amazing hard execute your outlook, about performance Obviously, and are excited the really as up to work today. Thank we continues you, for to and

any again we a talking of So couple look have look doesn't that you with of forward days over with to interact forward in have to and to you months reporting to few would and the like questions. I interaction who next

you, thank So care. everyone. Take

Operator

concluded. The attending conference for Thank you has now today's presentation.

disconnect. may You now

PetIQ (PETQ) 28 Feb 242023 Q4 Earnings call transcript