Petmed Express Inc (PETS) 2020 Q3 法說會逐字稿

Welcome to the PetMed Express, Inc., doing business as 1-800-PetMeds, conference call to review the financial results for the third fiscal quarter for the quarter ended on December 31, 2020. At the request of the company, this conference is being recorded.

歡迎來到 PetMed Express, Inc.，以 1-800-PetMeds 的形式開展業務，召開電話會議，審查截至 2020 年 12 月 31 日的第三財季的財務業績。應公司要求，對本次會議進行錄音。

Founded in 1996, 1-800-PetMeds is America's most trusted pet pharmacy, delivering prescription and nonprescription pet medications and other health products for dogs, cats and horses directed to the customer. 1-800-PetMeds markets its products through national advertising campaigns, which direct customers to order by phone or on the Internet and aim to increase recognition of the PetMeds family of brand names. 1-800-PetMeds provides an attractive alternative for obtaining pet medications in terms of convenience, price, ease of ordering and rapid home delivery.

1-800-PetMeds 成立於 1996 年，是美國最值得信賴的寵物藥房，為客戶提供針對狗、貓和馬的處方藥和非處方藥以及其他健康產品。1-800-PetMeds 通過全國廣告活動推銷其產品，引導客戶通過電話或互聯網訂購，目的是提高 PetMeds 系列品牌的知名度。1-800-PetMeds 在便利性、價格、易於訂購和快速送貨上門方面為獲得寵物藥物提供了一個有吸引力的替代方案。

At this time, I would like to turn the call over to the company's Chief Financial Officer, Mr. Bruce Rosenbloom.

此時，我想將電話轉給公司的首席財務官 Bruce Rosenbloom 先生。

Thank you. I'd like to welcome everybody here today. Before I turn the call over to Mendo Akdag, our President and Chief Executive Officer, I'd like to remind everyone that the first portion of this conference call will be listen-only until the question-and-answer session, which will be later in the call.

謝謝。我想歡迎大家今天來到這裡。在我將電話轉給我們的總裁兼首席執行官 Mendo Akdag 之前，我想提醒大家，本次電話會議的第一部分將是只聽，直到問答環節，這將在稍後進行在通話中。

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 of 1995 or 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 to be materially different from future results, performance or achievements expressed or implied by these statements. We have identified various risk factors associated with our operations in our most recent annual report and other filings with the Securities and Exchange Commission.

此外，將包含在本次新聞發布會中的某些信息可能包括 1995 年《私人證券訴訟改革法案》或美國證券交易委員會定義的前瞻性陳述，這些陳述可能涉及許多風險和不確定性。這些陳述是基於我們的信念以及我們根據目前可用的信息所使用的假設。由於這些陳述反映了我們目前對未來事件的看法，因此這些陳述涉及風險、不確定性和假設。實際的未來結果可能會因多種因素而有很大差異，這些因素可能導致實際結果或事件與這些陳述明示或暗示的未來結果、業績或成就存在重大差異。我們在最近的年度報告和提交給美國證券交易委員會的其他文件中確定了與我們的運營相關的各種風險因素。

Now let me introduce today's speaker, Mendo Akdag, President and Chief Executive Officer of 1-800-PetMeds. Mendo?

現在讓我介紹今天的演講者，Mendo Akdag，他是 1-800-PetMeds 的總裁兼首席執行官。門多？

Thank you, Bruce. Good morning. Welcome, and thank you for joining us. In the beginning of 2021, we unveiled the brand-new logo to commemorate the company's 25th anniversary. The inspiration for this new logo and brand identity came mostly from consumer feedback. We embraced the opportunity to refresh our brand to best represent pet health and wellness on our new website platform.

謝謝你，布魯斯。早上好。歡迎，並感謝您加入我們。2021年初，為紀念公司成立25週年，我們啟用了全新的標識。這個新標誌和品牌標識的靈感主要來自消費者的反饋。我們抓住機會更新我們的品牌，以在我們的新網站平台上最好地代表寵物健康和保健。

Now we will review the highlights to our financial results. We'll compare our third fiscal quarter ended on December 31, 2020, to last year's quarter ended on December 31, 2019.

現在我們將回顧我們財務業績的亮點。我們將比較截至 2020 年 12 月 31 日的第三財季與截至 2019 年 12 月 31 日的去年財季。

For the third fiscal quarter ended on December 31, 2020, our sales were $65.9 million compared to $59.9 million for the same period the prior year, an increase of 10%. The increase in sales was due to increases in reorder sales. The average order value for the quarter was approximately $88 compared to $85 for the same quarter the prior year.

截至 2020 年 12 月 31 日的第三財季，我們的銷售額為 6590 萬美元，上年同期為 5990 萬美元，增長 10%。銷售額的增加是由於再訂購銷售額的增加。本季度的平均訂單價值約為 88 美元，而去年同期為 85 美元。

For the third fiscal quarter, net income was $7.6 million or $0.38 diluted per share compared to $6.8 million or $0.34 diluted per share for the same quarter of the prior year, an increase to net income of 11%. Reorder sales increased by 12% to $60.2 million for the quarter compared to reorder sales of $53.8 million for the same quarter the prior year. We are encouraged with the continued strong reorders.

第三財季淨收益為 760 萬美元或每股攤薄收益 0.38 美元，上年同期為 680 萬美元或每股攤薄收益 0.34 美元，淨收益增長 11%。本季度的再訂購銷售額增長了 12%，達到 6020 萬美元，而去年同期的再訂購銷售額為 5380 萬美元。我們對持續強勁的再訂購感到鼓舞。

Our customer retention has increased with the help of our loyalty and easy refill programs and our new website platform. New order sales decreased by 7% to $5.7 million for the quarter compared to $6.1 million for the same period the prior year. However, for the 9 months, new order sales increased by 10%. We acquired approximately 73,000 new customers in our third fiscal quarter compared to 76,000 for the same period the prior year. The seasonality in our business is due to the proportion of flea, tick and heartworm medications in our product mix. Spring and summer are considered peak season, with fall and winter being the off-season. For the third fiscal quarter, our gross profit as a percent of sales was 29.8% compared to 29.5% for the same period a year ago, an improvement of approximately 25 basis points.

在我們的忠誠度和輕鬆充值計劃以及我們的新網站平台的幫助下，我們的客戶保留率有所提高。本季度新訂單銷售額下降 7% 至 570 萬美元，而去年同期為 610 萬美元。然而，前 9 個月，新訂單銷售額增長了 10%。我們在第三財季獲得了大約 73,000 名新客戶，而去年同期為 76,000 名。我們業務的季節性是由於跳蚤、蜱蟲和心絲蟲藥物在我們的產品組合中所佔的比例。春季和夏季被認為是旺季，秋季和冬季是淡季。對於第三財季，我們的毛利潤佔銷售額的百分比為 29.8%，而去年同期為 29.5%，提高了約 25 個基點。

General and administrative expenses as a percent of sales were 9.8% for the quarter compared to 10.1% for the same quarter the prior year. We were able to leverage the G&A by increased sales. For the quarter, our advertising expenses were relatively flat at $3.2 million compared to the same quarter the prior year. Advertising cost of acquiring a customer for the quarter was approximately $44 compared to $42 for the same quarter of the prior year, and for the 9 months, it was $49 compared to $53 for the 9 months of the prior year.

本季度一般和管理費用佔銷售額的百分比為 9.8%，而去年同期為 10.1%。我們能夠通過增加銷售額來利用 G&A。本季度，我們的廣告費用與去年同期相比持平，為 320 萬美元。本季度獲取客戶的廣告成本約為 44 美元，上年同期為 42 美元，前 9 個月為 49 美元，上年同期為 53 美元。

We had $106.5 million in cash and cash equivalents and $28.2 million in inventory with no debt as of December 31, 2020. Net cash from operations for the 9 months was relatively flat at $21.6 million compared to the 9 months last year.

截至 2020 年 12 月 31 日，我們擁有 1.065 億美元的現金和現金等價物以及 2820 萬美元的庫存，沒有債務。與去年同期相比，前 9 個月的運營現金淨額為 2160 萬美元，相對持平。

This ends the financial review. Operator, we're ready to take questions.

財務審查到此結束。接線員，我們準備好接受提問了。

(Operator Instructions) And our first question is from Erin Wright with Crédit Suisse.

（操作員說明）我們的第一個問題來自瑞士信貸銀行的 Erin Wright。

First, with the new customers that were added during the pandemic, how are you seeing the purchasing behavior of particularly those customers that adopted new pets during the pandemic? How do you anticipate the spending for that cohort will trend, for instance, in year 2 and beyond?

首先，對於大流行期間增加的新客戶，您如何看待大流行期間特別是那些領養新寵物的客戶的購買行為？例如，您如何預測第二年及以後該人群的支出趨勢？

It's going well. As you have seen, our reorder sales increased by 12%, which means that the customers that we added during the pandemic are reordering, which is a good sign.

進行得順利。如您所見，我們的再訂購銷售額增長了 12%，這意味著我們在大流行期間添加的客戶正在重新訂購，這是一個好兆頭。

Okay. And as a follow-up to that, the loyalty program, can you speak to some numbers around that in terms of traction or adoption thereon? And how that's progressing relative to your expectations?

好的。作為忠誠度計劃的後續行動，您能否就其牽引力或採用率談談一些數字？相對於您的期望，進展如何？

Approximately 20% of the orders had loyalty credits, Erin. So it's being used to -- fairly well.

艾琳，大約 20% 的訂單有忠誠度積分。所以它被用來——相當好。

Okay. And then one last question. Have you thought or contemplated around services beyond pharmacy, like telehealth platforms or other services that you could kind of link or co-market across your platform?

好的。然後是最後一個問題。您是否考慮或考慮過藥房以外的服務，例如遠程醫療平台或您可以在您的平台上進行鏈接或共同營銷的其他服務？

Yes, we are exploring them. We'll be focused on them the next fiscal year, and we will give you more information in the later part of the year.

是的，我們正在探索它們。我們將在下一個財政年度重點關注它們，我們將在今年下半年為您提供更多信息。

Our next question is from Anthony Lebiedzinski with Sidoti.

我們的下一個問題來自 Anthony Lebiedzinski 和 Sidoti。

So first, obviously, a very solid reorder sales growth, but new order sales were down. Mendo, what would you point to us to the primary reasons why new order sales were down in the quarter?

因此，首先，很明顯，再訂單銷售增長非常穩健，但新訂單銷售卻下降了。Mendo，您認為本季度新訂單銷售額下降的主要原因是什麼？

The market was more promotional during the holidays. That negatively impacted the new order sales, but it's also our off-peak season. So we'll be more aggressive with advertising during the peak season when demand is strong.

節假日市場促銷力度更大。這對新訂單銷售產生了負面影響，但這也是我們的淡季。因此，在需求旺盛的旺季，我們會更加積極地投放廣告。

Got it. Okay. And then yes, so typically, in the off-season, there is a sequential improvement in gross margins between 2Q and 3Q. Here, there was a little bit of a step down versus the second quarter, obviously, up year-over-year. So just wondering, was there a notable change between the shift of business between Rx and OTC? Or maybe was there -- just wondering about the margin impact from the loyalty credits. I mean, if you can just talk about the gross margin a little bit more?

知道了。好的。然後是的，通常在淡季，第二季度和第三季度之間的毛利率會連續提高。在這裡，與第二季度相比略有下降，顯然，同比上升。所以只是想知道，Rx 和 OTC 之間的業務轉移之間是否有顯著變化？或者也許在那裡 - 只是想知道忠誠度積分對利潤率的影響。我的意思是，你能不能多談談毛利率？

Sure. Product mix was a little different. And as I said, the market was more promotional during the holidays compared to the September quarter, which to be competitive, we attempted to match the market.

當然。產品組合有點不同。正如我所說，與 9 月季度相比，市場在假期期間更具促銷性，為了具有競爭力，我們試圖與市場相匹配。

Got it Okay. And as far as the loyalty credits, did that have any -- just wondering about the impact of that on the gross margin?

明白了 好的就忠誠度積分而言，是否有任何 - 只是想知道它對毛利率的影響？

Yes. There were more this promotional discounts in the quarter compared to the same quarter last year.

是的。與去年同期相比，本季度的促銷折扣更多。

Right. Okay.

正確的。好的。

Including loyalty credits.

包括忠誠度積分。

Got it. Got it. But you're not quantifying that, I guess, at this point. Lastly, as far as your outlook for advertising expenses, as far as new customer acquisition costs, how should we think about that?

知道了。知道了。但我猜，此時你還沒有量化它。最後，就您對廣告費用的展望，就新客戶獲取成本而言，我們應該如何考慮？

We'll be more aggressive during peak season when demand is strong. I would anticipate a double-digit growth on advertising expenses.

我們會在需求旺盛的旺季更加積極進取。我預計廣告費用將出現兩位數的增長。

In the fourth quarter or next -- as far as that...

在第四季度或下一季度——就此而言……

During the season, the peak season starts in March. It depends on the weather conditions. We'll see what happens.

在這個季節，旺季從三月開始。這取決於天氣情況。我們將看看會發生什麼。

(Operator Instructions)

（操作員說明）

Our next question is from Ben Rose with Battle Road Research.

我們的下一個問題來自 Battle Road Research 的 Ben Rose。

A few questions. To begin with, Mendo, in terms of the rollout of the website enhancements, is that relatively complete at this stage? And what is your assessment of the improvement?

幾個問題。首先，Mendo，就網站增強功能的推出而言，現階段是否相對完成？您對改進的評價是什麼？

It is not complete yet. We anticipate it will be completed by June. But it will be substantially probably completed by end of March, but I would say, full completion by June. We did some A/B testing, A/B/C/D testing, I should say, comparing the new design with the old design. And we are predicting some sales lift, approximately a 2% sales level.

它還沒有完成。我們預計它將在 6 月完成。但它可能會在 3 月底之前基本完成，但我會說，到 6 月完全完成。我們做了一些 A/B 測試，A/B/C/D 測試，我應該說，將新設計與舊設計進行比較。我們預計銷售額會有所提升，大約 2% 的銷售額水平。

Okay. Good to know. There's been much discussion about the impact of the aging pet population, particularly with pet adoptions being up over the last number of months during COVID. Are you seeing any shift in your product mix that would suggest that that's occurring?

好的。很高興知道。關於寵物人口老齡化的影響，人們進行了很多討論，尤其是在 COVID 期間的最後幾個月裡，寵物收養率有所上升。您是否看到產品組合中的任何變化表明這種情況正在發生？

Product mix is shifting to prescriptions, but that's driven by the veterinarians. So the OTC is coming down and prescription is growing. There is some growth in medications beyond maintenance, I should say. Chronic illness medications are growing.

產品組合正在轉向處方，但這是由獸醫推動的。因此，OTC 正在下降，處方正在增長。我應該說，除了維持治療之外，藥物治療有所增長。慢性病藥物正在增長。

Okay. Okay. You have a couple of customer benefits on your website that I don't think are, at least in my opinion, that well understood, but one is the ability to offer compound medications. I know you've been doing this for quite a while. Do you have a formal outreach plan in place to reach the vets, the veterinarian community to let them know about this?

好的。好的。您在您的網站上有幾個客戶利益，我認為至少在我看來，這不是很好理解的，但其中一個是提供複合藥物的能力。我知道你這樣做已經有一段時間了。您是否制定了正式的外展計劃來聯繫獸醫和獸醫社區，讓他們知道這件事？

We are not offering to the veterinarians. We are offering it to our customers. It's still by a third-party compound pharmacy.

我們不提供給獸醫。我們正在向我們的客戶提供它。還是第三方的複合藥店。

Okay. Has it been increasing in popularity over the last several quarters? Or...

好的。它在過去幾個季度中是否越來越受歡迎？或者...

Yes, it is.

是的。

Okay. And the Ask a Vet (sic) [Ask the Vet] feature that you have on your website, have you noticed an increase in the number of customer inquiries in terms of customers wanting to speak directly to a vet about their pet conditions?

好的。還有您網站上的問獸醫（原文如此）[問獸醫]功能，您是否注意到客戶詢問的數量有所增加，因為客戶希望直接與獸醫談論他們的寵物狀況？

Right. On our new website redesign, the Ask the Vet is going to be more prominent. So it just -- in the old design, it was not prominent. So we anticipate that we will see more activity going forward.

正確的。在我們重新設計的新網站上，Ask the Vet 將更加突出。所以它只是 - 在舊設計中，它並不突出。因此，我們預計我們將看到更多的活動向前發展。

Okay. And another question is, is there -- PetMeds does have a very well-established brand, as I understand it, as a function of its Net Promoter Score or the Net Promoter Score reflecting that. Have you given any thought to developing branded merchandise for PetMeds, that is to say nonmedication pet-oriented merchandise with the PetMed brand?

好的。另一個問題是，PetMeds 確實有一個非常成熟的品牌，據我所知，作為其淨推薦值或反映這一點的淨推薦值的函數。您是否考慮過為 PetMeds 開髮品牌商品，也就是說，使用 PetMed 品牌的非藥物寵物商品？

Yes. We do have OTC medications under our brand. We did not think about beyond medications at this time.

是的。我們的品牌下確實有非處方藥。我們此時沒有考慮藥物以外的事情。

Okay. And then finally, if I may, in concert with the increase in advertising that you're anticipating during peak season, do you think we'll see a pickup -- I guess 2 questions. One is, will we see a pickup in TV advertising? And then secondly, will there be kind of a renewed emphasis on the brand, either by way of a new brand campaign?

好的。最後，如果可以的話，與您在旺季期間預期的廣告增加相一致，您認為我們會看到一個回升 - 我猜有 2 個問題。一是，我們會看到電視廣告有所回升嗎？其次，是否會通過新的品牌活動重新強調品牌？

Yes, you will see some more activity on television advertising. We'll likely double our budget from last year on television.

是的，您會看到更多關於電視廣告的活動。我們可能會將去年的電視預算增加一倍。

Okay. And then as far as any kind of thoughts to new branding or enhanced branding, generally speaking?

好的。那麼一般來說，關於新品牌或增強品牌的任何想法？

Yes. Obviously, we'll use our new refreshed brand in our advertising.

是的。顯然，我們將在廣告中使用我們的新品牌。

And at this time, I'm showing no further questions. I'll turn it back to you, sir.

在這個時候，我沒有再提出任何問題。我會把它還給你，先生。

Thank you. The next fiscal year, we'll be exploring alternative ways for acquiring customers and adding value-added services, and we'll 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. Operator, this ends the conference call. Thank you.

謝謝。下一財年，我們將探索獲取客戶和增加增值服務的替代方式，我們將繼續投資我們的電子商務平台和移動應用程序，以更好地為我們的客戶服務。今天的電話會議到此結束。感謝您加入我們。話務員，電話會議到此結束。謝謝。

Thank you for participating in today's conference. You may now disconnect.

感謝您參加今天的會議。您現在可以斷開連接。