Q3 2020 Earnings Call

Welcome to the mid express incorporated doing this is just one 800 Petmeds conference call to review the financial results for search fiscal quarter ended December 31st when she 19.

At the request the company this conference calls being recorded.

Founded in 90, 96.8 hundred Petmeds America's largest <unk> pharmacy, delivering prescription and on prescription pet medications that are health products, three dogs and cats, so back to the consumer.

When it kind of Petmeds markets products through national advertising campaigns, which start consumers to order by stone or on the Internet.

<unk> increased recognition of the patent much comedy spreads names.

100, Petmeds provides an attractive alternatives for providing pet medications in terms of convenience price ordering and rapid home delivery.

At this time I would like to turn call over to the Companys Chief Financial Officer, Mr., Bruce motion, though you may begin.

Thank you good morning, I'd like to welcome everybody here today before I turn the call over to Motherwell dollar President and Chief Executive Officer, I'd like to remind everyone that the first portion of this conference call will be will slowly until the question answer session, which will be later on the call.

Also certain information that will be included in this press conference May include forward looking statements within the meaning of the private Securities Litigation Reform Act, a bunch of any thought well Securities Exchange Commission that may involve a number of risks and uncertainties.

Statements are based on our beliefs as well assumptions, we have views based upon information currently available to us because these statements reflect our current views concerning future events. These statements involve risk.

Do you and assumptions actual future results may vary significantly based on number of factors that may cause actual results or events to be materially different from future results performance or achievements expressed or implied by these statements.

Identified various risk factors associated with our operations and our most recent annual report and other filings with the Securities and Exchange Commission.

Now, let me introduce today Speaker, Mendo Ortho, President and Chief Executive Officer, a 100 Petmeds Mendo. Thank you Bob.

Welcome, everyone and I've talked before joining us.

Today, we will review the highlights on our financial results.

Well, we compare our third fiscal quarter ended on December 31st 2019.

To last years quarter ended on December 31st 2018.

For this to our fiscal quarter ended on December 31st 2019, our sales were relatively flat at $59.9 million compared to $60.1 million for the same period the prior year.

The average order value for the quarter was approximately $85 compared to $84 for the same core as the prior year.

For the third fiscal quarter net income was $6.8 million or 34 cents diluted per share.

To $7.8 million or 38 side or the per share for the same quarter. The prior year. It decreased the diluted earnings per share of stoppers on.

The decrease to that income for the quarter was mainly due to lower gross profit margins.

Net income margins for the quarter sequentially improved by 180 basis points compared to the September quarter, 470 basis points compared to the June quarter.

Reorder sales increased by whoppers up to $53.8 million for the quarter compared to reorder sales were $53.3 million for the same quarter the prior year.

You order sales decreased by 9.9% to $6.1 billion for the quarter compared to $6.8 million for the same period the prior year.

Increased a lot of competition negatively impacted our reorder sales.

We acquired approximately 76000 their customers at outdoor fiscal quarter, well get to 81004, the same period the prior year.

The seasonality in our businesses due to the promotional fleet pick out Harlow medications in our product mix spring and summer our cost of that peak season with call out with that being the off season.

For this to our fiscal quarter, our gross profit as a percentage of sales was 29.5% welfare to 32.3% for the same period a year ago.

Manufacturers' medical that would advise price policies.

Taking a general pricing discipline into the market.

As a result.

Gross profit margins for the quarter improved sequentially by 90 basis points compared to this a solid quarter of 220 basis points focus as a tool for.

General and administrative expenses for the quarter increased by $247000, mainly due to increased payroll.

For the quarter, our advertising expenses were $3.2 million go up is to $3.6 million for the same quarter of the prior year.

The increase of about 12%.

And with of course will acquiring a customer for the quarter was $42 copies of $45 for the same quarter the prior year.

We had $92.4 million think cash cash equivalents.

$24.2 million, so they will authority with no debt as of December 34 to 2019.

Net cash from operations for the my boss was $21.6 million compared to $32 million for that line lumps last year. The decrease was mainly due to decreases in that income.

This has the financial review operator, we're ready to take questions.

Operator, we're ready to take questions.

Yes, Sir well now begin to question and answer session. If you'd like chassis question. Please press star.

Please limit yourself and record first Dave and company.

Requirement for his name and that Stephen company clearly when problems.

Our team once again should not Kathy question.

Won an accord person last name and company. Thank you.

Our first question is from Kevin.

That's wrong Ace research your line is open.

Good morning, Haven, and though I'm, sorry, I guess, starting up starting off at Nab pricing, obviously, having they are slightly positive impact on margins.

Can you remind us do you have all of the major manufacturers under map now or is there still one left.

There are no longer laugh, yes, all major manufacturers.

Okay, Great and then.

Can you give us an update I think you guys talked about.

Switching over adding on a new ecommerce platform by year and did that get done then yes, so as to your minus what the cost out late was.

It does not get die, yes, we are anticipating it's going to happen in February .

The cost is about $5 million.

Okay, Great Great and then you know with the with the presidential election coming up this year can you give us some calling on your thoughts for advertising are you gonna stay with online advertising and assume that though are you going to add on a little bit achieves he just stopped time.

Under the ABL ad spend.

This year.

Majority all our advertising is gonna be all line that we do any Tvs glad to be minimal and its likely going to be in this spring and summer.

Gotcha Gotcha, and then last question for me you know clearly things still competition, but like you said, it's little bit more rationalized.

So just wondering if you have any thoughts in terms of how fast the online or ecommerce channels growing and kind of how we should gauge your share of that growth.

Oh, it wouldn't be addressed so I'm not going I guess, Oh I can tell you that you know with 10 areas still have the majority all the market share on the prescription Leds.

And we anticipate continuing market share shift to direct to consumer all watch at all.

Great. Thanks, guys.

Thank you. Our next question is from Anthony Lebiedzinski from Sidoti and company Your company.

Line is open.

Thank you and good morning. Thank you for the use of question. So I guess first I just wanted to.

As soon as far as the.

The increase in April .

Gross margins sequentially is that entirely using due to map pricing or is there anything else.

Perhaps drove those increases.

Yeah were less price itself with that yes.

Okay, and can you remind us as far as E. Commerce platform I mean, what are the main things that you were looking to.

Three.

Improvements.

To do.

Commerce platform.

That's the objective was to improve user experience. It has a AI capabilities. So we want to do more personalization each will reduce the.

Got it okay.

Okay, and thus far is your comment about optimizing your marketing.

You just mentioned about doing pretty much all online advertising.

Anything else that we should think about as far as.

Advertising spending marketing efficiencies.

Oh, we're working on optimizing our marketing. So it was all peak season will be Lloyd. This is a advertise it wouldn't be season.

This is starting in the June quarter.

Well it starts in March and yes.

Okay, Okay and lot less.

Cash position continues to be pretty healthy only balance sheet.

You guys thinking about.

Yeah.

Dividends versus buybacks.

Currently at over everything as you know until with us to any sub 27 scottsboro or.

We do look at you know acquisition opportunities in golf course of business.

All right. Thank you very much and best of luck.

Thank you.

Thank you once again not Kathy question crashed Sarwan. Please record your name and company clearly when prompted.

All your class you may pass parties.

No questions at this time, I mean, I hand, the call back towards speakers for closing remarks.

Thank you and 2020 will focus on optimizing our marketing and this more competitive environment being more efficient with our advertising spending.

Shut it will continue investing in our ecommerce platform to better service our customers. This wraps up todays conference call. Thank you for joining us operator to assess the golf the school.

Thank you.

Thank you for participating you may now disconnect.