Q4 2020 Petmed Express Inc Earnings Call

Welcome to the Pet Med Express incorporated doing business as one 800 Pet Meds conference call to review the financial results for the fourth fiscal quarter and fiscal year ended on March 31st 2021.

At the request of the company. This conference call is being recorded founded in 1990, 618 hundred pet meds as Americas, most trusted pet pharmacy, delivering prescription and nonprescription pet medications and other health products for dogs cats and horses direct to the consumer.

800, pet meds markets its products through national advertising campaigns, which direct consumers to order by phone or on the Internet and aim to increase the recognition of the pet med family of brand names.

800, pet Meds provides an attractive alternative for obtaining pet medications in terms of convenience price ease of ordering and a rapid home delivery at this time I would like to turn the call over to the company's Chief Financial Officer, Mr. Bruce Rosenbloom.

Thank you I would like to welcome everybody here today before I turn the call over to <unk>, Our President and Chief Executive Officer, I'd like to remind everyone that the first portion on this conference call will be listen only until the question and answer session, which will be later on the call on.

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 on 1995 on the Securities and Exchange Commission that May involve a number of risks and uncertainties. These statements are based on our beliefs as well as assumptions.

We have used based upon information currently available to us because these statements reflect our current views concerning future events. These statements involve risks uncertainties and assumptions actual future results may vary significantly based on a number of factors that may cause the actual results or events could be material.

Different from future results performance or achievements expressed or implied by these statements. We've identified various risk factors associated with our operations in our most recent annual report and other filings with the Securities and Exchange Commission now let me introduce today's speaker Mondo often all president.

Chief Executive Officer of one 800 pet meds.

Thank you Bruce welcome and thank you for joining us.

Today, We will review the highlights of our financial results, we will compare our fourth fiscal quarter on fiscal year ended on March 31, 2021 to last year's quarter and fiscal year ended on March 31 2020.

For the fourth fiscal quarter ended on March 31, 2021, our sales were $74 $7 million compared to sales growth. So when he followed by $3 million for the same period the prior year index.

<unk> three five per shot.

For the fiscal year ended on March 31, 2021 sales were $392 million compared to $284 1 million for the prior fiscal year.

An increase of 8.8 per shop.

The sales for the quarter might have been negatively impacted by colder weather and the day bad was pull forward last year due to the pandemic.

The average order value was approximately $93 four per quarter compared to $90 for the same quarter the prior year.

For the fourth fiscal quarter net income was $6 8 million or 30 force outside of the per share compared to $7 million or 35 satisfied of the per share for the same quarter. The prior year a decrease to net income on two seven per cent.

For the fiscal year net income was $34 6 billion or $1 52 sales side of the per share compared to $25 $9 million or $1.29 diluted per share a year ago.

An increase to net income of $18 four per zone.

Reorder sales decreased by $1 four per shot to $64 $2 million for the quarter compared to reorder sales of $65 $2 million for the same quarter the prior year.

For the fiscal year reorder sales increased by nine seven per share for $272 6 million compared.

Compared to $248 $6 million for the last year.

New order sales decreased by 18% to seven $5 million for the quarter compared to like $1 billion for the same period the prior year for.

For the fiscal year reorder sales increased by $2 eight per shot to $36 $6 billion compared to $35 $6 million for the last year.

We acquired approximately 88000, new customers in our fourth fiscal quarter compared to 100 on 7000 for the same period the prior year.

We acquired approximately 443000, new customers in the fiscal year compared.

420, Wildcat awesome for the last year.

The seasonality of our businesses due to the proportion of flea tick and heartworm medications in our product mix spring.

<unk> gone through their peak season with fall I went there being the off season.

For the fourth fiscal quarter, our gross profit. This approach on our sales was $28 six store shop compared to $29 two per shot for the same period a year of growth.

For the fiscal year, our gross profit per visit burst shuttle sales were 209, one per ton compared to 28 six per shop for the prior year.

The percentage decrease for the quarter can be attributed to several of our vendors shifting day of funding for all discounting product cost to co op marketing.

Our general and administrative expenses increased $830000 for the quarter, mainly due to increases in payroll, including stock based compensation and expenses related to our new website platform.

For the quarter, our advertising X classes were about $4 3 million.

Compared to $6 $2 million for the same quarter of the prior year.

For the fiscal year, it was <unk> 6 million.

Compared to $22 $7 million for the last fiscal year.

Advertising spending increased over the prior year, yet total net advertising expenses decreased due to increased co op marketing rebates.

Edward guidance on coastal acquiring a customer for the quarter defined as total advertising expenses divided by total net customers acquired was approximately $49 compared to $58 for the same quarter of the prior year.

For the fiscal year, it was $49 compared to $54 four per the last fiscal year.

We had $118 $7 million in cash on cash equivalents and $34 4 million.

Tori with no debt as of March 31, 2021.

Net cash from operations for the fiscal year was $41 million compared to $38 8 million for the prior fiscal year.

Inventory was higher due to increases on lead times and it was more than offset by increases in payables.

Capital expenditures were approximately $2 $4 billion for the fiscal year.

This adds to provide actual review.

Operator, we are ready to take questions.

Thank you.

If you would like to ask a question. Please press star one please on mute your phone and record your name is slowly and clearly when prompted your name is required to introduce your question again star one if you'd like to ask a question. Our first question comes from Erin Wright with Credit Suisse. Your line is open.

Hey, Thanks for taking the question.

Can you speak to those factors that you are mentioning that were impacting the gross margin in the quarter Inc.

How should we be thinking about that.

On that quarterly progression standpoint on the gross margin line.

And also just longer term can you help us frame the margin profile of your business and what are some of the factors we.

Would you be considering non recurrent.

Rather shifted from the Inc. <unk> co op marketing.

Your discounting products.

This negatively impacted gross margin for the quarter, a wild positively impacting our advertising expenses by reducing them.

We anticipate this trend is going to continue so I suggest you look at it at the operating income.

Operating margin level.

Instead of just gross margin.

Okay.

And then just a bigger picture question on the broader shift to online pet spending as well as the greater pet ownership trends that we saw over the course of the pandemic I guess, how should we be thinking about the stickiness of that customer base. What are you seeing now.

As we lap some of that.

The per.

Peak last year was the demand for what April looks like the peak. This year is going to be that allow for that day.

The weather was warmer last year in the March quarter compared to this year that also the bylaws.

Absolutely pulled forward last year due to the pandemic.

So we'll see what happens consumer behavior.

Pandemic is somewhat difficult to predict.

Okay, great. Thank you.

Thank you. Our next question comes from Anthony <unk> with Sidoti Your line is open.

Good morning, and thank you for the question so.

Just wanted to ask it any way for you guys to possibly quantify the impact of the colder weather what that was.

Especially.

Texas on Midwest got ahead can be hard to in February. So just wondering if you could take a stab at that just China.

Give us a sense as to the magnitude of the weather impact maybe what it was he thinks.

Yes February was logical or for sure it's really difficult to operating it gets sent to us.

To make some assumptions to do that.

Oh, we're not going to do that at this time.

Okay.

I know, it's tough, but I figured out.

But ask it anyway, but okay and then.

You talked in the release about and this is something you said before but just wanted to see if you guys could expand on what you are looking at this force fiscal 'twenty two plans.

With respect to exploring alternative ways of acquiring new customers and adding value added services.

Can you give us an update on that and also as far as your e-commerce platform or what else is what will you have you done what needs to still be done.

To get that fully finalized thank you.

We are still in process of exploring for new revenue sources.

New opportunities with the pet health and wellness.

And I'll try it two ways or requiring new crush the wires.

So we'll give you more information later product over the years, our website and App redesign is continuing its going to be about June July before we completed its.

It's never really gets completed but at least the legwork law jewelry, all which will be completed.

We will do some testing to further improve it.

Oh, Thank you on best of luck.

Got you.

Thank you and as a reminder, if you would like to ask a question. Please press star One. Our next question comes from Ben Rose Battle Road Research. Your line is open.

Yes, good good morning to both of your borrowings.

Some questions window around the ask COVID-19 feature that I guess in the last several months you've been more prominently featuring on the website was curious to know if you could speak either quantitatively or qualitatively about.

The number of sessions are that you may be having with.

Customers and just your thoughts about this particular feature and potentially expanding its use over the next fiscal year.

I will talk qualitatively that the use interest has been increasing.

And it's going to be more prominent who I'll speak on fleets.

Redesign we are redesigning the education section on our website so.

That has stopped Inc. Completed yet so it will be more prominent to also on the app is going to be more prominent so.

It should be helping with.

Helping the gross yield and also may help with acquiring customers.

Okay.

And then either for you or Bruce.

It looks like the inventory.

The inventory additions this year for the seasonally strongest June quarter were not quite as strong as they were whereas it was not quite as much as they were last year.

Could you speak to the.

Health of the supply chain and your ability to you know get the kind of medications that you need to fulfill customer orders.

As far as inventory balances our inventory balance was actually higher this year compared to last year, we really didn't see any significant issues in our major lines major brands. We did note that there was some possible lead time.

Issues on some of the smaller brands, but nothing material to the overall supply chain.

Okay.

Okay. That's it for me for now thank you very much.

Thank you and at this time, we have no further questions on the audio line.

Hand, it back to the speakers.

<unk> in fiscal 2022, we'll be exploring alternative ways of acquiring customers and adding value added services that we will continue investing in our e-commerce platform and mobile App to better service our customers. This wraps up today's conference call. Thank you for joining us on.

Greater the SaaS the conference call. Thank you.

Thank you that concludes today's conference. Thank you for participating you may disconnect at this time.

Okay.