Petmed Express Inc (PETS) 2020 Q2 法說會逐字稿

Good Morning. Welcome to the PetMed Express, Inc., doing business as 1-800-PetMeds, conference call to review the financial results for the second fiscal quarter for the quarter ended on September 30, 2020. As the request to the company, this conference call is being recorded.

早上好。歡迎來到 PetMed Express, Inc.，作為 1-800-PetMeds 開展業務，召開電話會議，審查截至 2020 年 9 月 30 日的第二財季財務業績。應公司要求，本次電話會議正在錄製中。

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 direct to the consumer. 1-800-PetMeds markets its product through national advertising campaigns, which direct consumers to order by phone or on the Internet and aim to increase the recognition of the PetMed's 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，直接向消費者提供狗、貓和馬的處方藥和非處方藥以及其他保健產品。 1-800-PetMeds 通過全國廣告活動推銷其產品，引導消費者通過電話或互聯網訂購，旨在提高 PetMed 品牌系列的知名度。 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 would like to welcome everybody here today. Unfortunately, due a personal matter, Mendo Akdag, our President and Chief Executive Officer, is unable to attend this morning's conference call.

謝謝。我想歡迎大家今天來到這裡。不幸的是，由於個人原因，我們的總裁兼首席執行官 Mendo Akdag 無法參加今天上午的電話會議。

I would 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.

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，這將在電話會議的後期進行。

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。

Thank you for joining us, and we hope everyone is continuing to stay safe and healthy. During the September quarter, consumer demand settled down due to a combination of vet clinics and brick-and-mortar pet retailers opening up, and consumers having stocked up in the June quarter.

感謝您加入我們，我們希望每個人都能繼續保持安全和健康。在 9 月季度，由於獸醫診所和實體寵物零售商的開業以及消費者在 6 月季度囤貨，消費者需求趨於穩定。

We have been open during our normal business hours without any material disruptions to our operations. We are still taking measures to ensure the health and safety of our dedicated employees by allowing them to work from home where possible and continuing with social distancing and enhanced disinfection in the workplace.

我們在正常工作時間內一直營業，沒有對我們的運營造成任何重大干擾。我們仍在採取措施，確保敬業員工的健康和安全，允許他們盡可能在家工作，並繼續保持社交距離並加強工作場所的消毒。

Also, we have not seen any major disruptions in our supply chain. However, we have experienced some delays in the delivery of the slow to medium moving inventory items. Now we will compare our second fiscal quarter ended on September 30, 2020, to last year's quarter ended on September 30, 2019.

此外，我們的供應鏈沒有出現任何重大中斷。但是，我們在交付慢速到中速移動庫存項目時遇到了一些延遲。現在，我們將比較截至 2020 年 9 月 30 日的第二財季與截至 2019 年 9 月 30 日的上一財季。

For the second fiscal quarter ended on September 30, 2020, our sales were $75.4 million compared to $69.9 million for the same period the prior year, an increase of 7.9%. For the 6 months ended on September 30, 2020, sales were $171.6 million compared to $149.9 million for the 6 months the prior year, an increase of 14.5%. The increases in sales were due to increases in reorder sales for the quarter and increases for both new order and reorder sales for the 6 months.

截至 2020 年 9 月 30 日的第二財季，我們的銷售額為 7540 萬美元，上年同期為 6990 萬美元，增長 7.9%。截至 2020 年 9 月 30 日止 6 個月，銷售額為 1.716 億美元，上年同期為 1.499 億美元，增長 14.5%。銷售額的增長是由於本季度再訂單銷售額的增加以及 6 個月新訂單和再訂單銷售額的增加。

The average order value was approximately $87 for the quarter compared to $85 for the same period last year. For the second fiscal quarter, net income was $8.4 million or $0.42 diluted per share compared to $6.7 million or $0.33 diluted per share for the same quarter the prior year, an increase to net income of 26%. And for the 6 months, net income was $16.2 million or $0.81 diluted per share compared to $12 million or $0.60 diluted per share a year ago, an increase to net income of 35%.

本季度的平均訂單價值約為 87 美元，而去年同期為 85 美元。第二財季淨收益為 840 萬美元或每股攤薄收益 0.42 美元，上年同期為 670 萬美元或每股攤薄收益 0.33 美元，淨收益增長 26%。這 6 個月的淨收入為 1620 萬美元或每股稀釋後 0.81 美元，而一年前為 1200 萬美元或每股稀釋後 0.60 美元，淨收入增長了 35%。

Reorder sales increased by 9.6% to $67.8 million for the quarter compared to reorder sales of $61.9 million for the same quarter of the prior year. And for the 6 months, reorder sales increased by 14.3% to $148.2 million compared to $129.6 million for the same period last year.

本季度再訂購銷售額增長 9.6% 至 6780 萬美元，而去年同期為 6190 萬美元。前 6 個月，再訂單銷售額增長 14.3% 至 1.482 億美元，而去年同期為 1.296 億美元。

New order sales decreased by 5% to $7.7 million for the quarter compared to $8.1 million for the same period the prior year. And for the 6 months, new order sales increased by 15.4% to $23.5 million compared to $20.3 million for the same period last year. We acquired approximately 96,000 new customers in our second fiscal quarter compared to 98,000 for the same period the prior year. And we acquired approximately 282,000 new customers in the 6 months compared to 238,000 for the same period a year ago.

本季度新訂單銷售額下降 5% 至 770 萬美元，而去年同期為 810 萬美元。前 6 個月，新訂單銷售額增長 15.4% 至 2350 萬美元，而去年同期為 2030 萬美元。我們在第二財季獲得了大約 96,000 名新客戶，而去年同期為 98,000 名。我們在 6 個月內獲得了大約 282,000 名新客戶，而去年同期為 238,000 名。

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.

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。

For the second fiscal quarter, our gross profit as a percentage of sales was 30.5% compared to 28.6% for the same period the prior year. And for the 6 months, our gross profit as a percentage of sales was 29% compared to 27.9% for the same period a year ago.

對於第二財季，我們的毛利潤佔銷售額的百分比為 30.5%，而去年同期為 28.6%。在這 6 個月裡，我們的毛利潤佔銷售額的百分比為 29%，而去年同期為 27.9%。

Gross margins improved by 190 basis points for the September quarter and by 110 basis points for the 6 months. The increases were due to the benefit of having direct relationships with all major manufacturers, and these manufacturers have minimum advertised price policies. Also, our product mix shifted to higher-margin prescription medications during the September quarter compared to the June quarter.

9 月份季度的毛利率提高了 190 個基點，6 個月的毛利率提高了 110 個基點。增加是由於與所有主要製造商有直接關係的好處，這些製造商有最低廣告價格政策。此外，與 6 月季度相比，我們的產品組合在 9 月季度轉向利潤率更高的處方藥。

General and administrative expenses as a percentage of sales were 9% for both the quarter and the same quarter last year. For the quarter, we spent $5.1 million in advertising compared to $4.8 million for the same quarter the prior year, an increase of 8%. For the 6 months, we spent $14.2 million in advertising compared to $13.4 million for the 6 months a year ago, an increase of 6%. The advertising cost of acquiring a customer was approximately $54 for the quarter compared to $49 for the same quarter of the prior year. And for the 6 months, it was $50 compared to $56 for the 6 months last year. The increase for the quarter was due to increases in advertising costs.

本季度和去年同期的一般和管理費用佔銷售額的百分比均為 9%。本季度，我們在廣告上的支出為 510 萬美元，而去年同期為 480 萬美元，增長了 8%。這 6 個月，我們在廣告上花費了 1420 萬美元，而去年同期為 1340 萬美元，增長了 6%。本季度獲取客戶的廣告成本約為 54 美元，而去年同期為 49 美元。這 6 個月為 50 美元，而去年 6 個月為 56 美元。本季度的增長是由於廣告成本的增加。

We had $106.3 million in cash and cash equivalents, and $21.5 million in inventory with no debt as of September 30, 2020. Net cash from operations for the 6 months was $15.2 million compared to $17.3 million for the same period last year. This ends the financial review. Operator, we are ready to take questions.

截至 2020 年 9 月 30 日，我們擁有 1.063 億美元的現金和現金等價物，以及 2150 萬美元的無債務存貨。這 6 個月的運營現金淨額為 1520 萬美元，而去年同期為 1730 萬美元。財務審查到此結束。接線員，我們準備好接受提問了。

(Operator Instructions) 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 Crédit Suisse 的 Erin Wright。

What's your mix of over-the-counter versus prescription medications now? Has it meaningfully changed here? And can you remind us of the profit profile, OTC versus prescription, and -- particularly given the MAP pricing strategy that has been implemented?

你現在的非處方藥和處方藥的組合是什麼？它在這裡發生了有意義的變化嗎？您能否提醒我們利潤概況、OTC 與處方，以及——特別是考慮到已經實施的 MAP 定價策略？

Sure thing. If you remember call in the June quarter, we saw an uptick in OTC, a bit -- a little bit more uncharacteristic increase, is a little bit -- it was different from our normal mix. The September quarter was more of a normalized mix, although we did see a bit of an increase in Rx over OTC. And obviously, as we mentioned previously, prescription medications have a higher margin profile than the OTC products.

當然可以。如果你還記得 6 月季度的電話，我們看到場外交易有所上漲，有點 - 有點不尋常的增長，有點 - 這與我們的正常組合不同。 9 月季度更像是一個正常化的組合，儘管我們確實看到 Rx 比 OTC 略有增加。顯然，正如我們之前提到的，處方藥的利潤率高於非處方藥。

Would you say that prescription is over half now in ...

你會說處方現在超過一半......

Over half of our total sales?

超過我們總銷售額的一半？

Yes.

是的。

Oh, yes, definitely, much more than half.

哦，是的，絕對超過一半。

Okay. Great. And then on the stickiness of the COVID-driven customer base, I guess how much of there is a paradigm shift to online versus just some stockpiling given COVID? I'm curious kind of how we should be thinking about sort of new customer growth over the balance of the year? And what you're seeing in terms of that COVID-driven customer base?

好的。偉大的。然後關於 COVID 驅動的客戶群的粘性，我猜想有多少範式轉移到在線而不是在 COVID 的情況下只是一些庫存？我很好奇我們應該如何考慮今年餘下時間的新客戶增長？您在 COVID 驅動的客戶群方面看到了什麼？

Right. Overall, demand has settled down with the combination of vet clinics and brick-and-mortar pet stores opening up, and also, as you mentioned, consumers stocking up in the June quarter. Also, our new website platform might have had a tempering negative effect on our natural search during the quarter, which may have negatively impacted our new order sales in the short-term and what we saw in the September quarter. We are now in the second phase of our e-commerce platform. We are now focusing on redesigning our website and mobile app to optimize our customers' digital experience, which should improve our new customer conversion in the future.

正確的。總體而言，隨著獸醫診所和實體寵物店的開業，以及正如您提到的，消費者在 6 月季度開始囤貨，需求已經穩定下來。此外，我們的新網站平台可能對本季度的自然搜索產生緩和的負面影響，這可能對我們的短期新訂單銷售和我們在 9 月季度的銷售產生負面影響。我們現在正處於電子商務平台的第二階段。我們現在專注於重新設計我們的網站和移動應用程序，以優化我們客戶的數字體驗，這將在未來提高我們的新客戶轉化率。

As far as COVID, I mean it's really an unknown right now. Obviously, we're seeing cases increasing overall in majority of the states in the U.S. So we'll just have to see how that -- and how that -- how those trends overall affect our business. As of right now, we did see demand settle down with the opening of those clinics in the retail stores. But overall, we've seen reorders become extremely strong, and it may also be because of the increased new customers that we were able to take in for the 6 -- for the first 6 months of our fiscal year.

至於 COVID，我的意思是它現在真的是一個未知數。顯然，我們看到美國大多數州的病例總體上都在增加。所以我們只需要看看這些趨勢如何——以及如何——如何對我們的業務產生總體影響。截至目前，我們確實看到需求隨著零售店開設這些診所而穩定下來。但總的來說，我們已經看到再訂單變得非常強勁，這也可能是因為我們能夠在 6 年——我們財政年度的前 6 個月——增加新客戶。

Our next question is from Anthony Lebiedzinski with Sidoti & Company.

我們的下一個問題來自 Sidoti & Company 的 Anthony Lebiedzinski。

So I guess my first question. So kind of looking back now at the first half of the fiscal year, you mentioned that there was some -- it sounds like some pull forward of demand in the June quarter. Any way you can possibly maybe try to quantify how much you think you saw a pull forward into the June quarter?

所以我想我的第一個問題。現在回顧一下本財年的上半年，你提到有一些 - 這聽起來像是在 6 月季度出現了一些需求拉動。您可以通過任何方式嘗試量化您認為您看到 6 月季度的進展有多少？

We usually don't like to quantify to give that information now. We do know what that number is internally. Again, it's also -- as we mentioned, we were in the first phase of our website, our new e-commerce platform. And so that may have negatively impacted reorders as well. So it's -- we have an estimate. There's a few assumptions involved with that. But we're not really prepared to give that number out at this time.

我們現在通常不喜歡量化來提供這些信息。我們確實知道內部數字是多少。同樣，正如我們所提到的，我們正處於我們網站的第一階段，即我們的新電子商務平台。因此，這也可能對重新訂購產生負面影響。所以它 - 我們有一個估計。這涉及一些假設。但我們現在還沒有真正準備好公佈這個數字。

Okay. That's fair enough. And then so as far as the second phase of the website improvement, when do you expect to have that completed?

好的。這很公平。那麼關於網站改進的第二階段，您預計什麼時候完成？

Yes. Our target date is during this third quarter. So hopefully, by the end of the year, we should be launched fully with both the redesign of the website and also the mobile app.

是的。我們的目標日期是在第三季度。因此，希望到今年年底，我們可以全面啟動網站和移動應用程序的重新設計。

Got it. Okay. And then you mentioned ad spending being up. I know in the past, you've had increases in costs because of the election. Was the increase in advertising spending because of that? Or was there something else going on?

知道了。好的。然後你提到廣告支出增加了。我知道過去，由於選舉，你的成本增加了。廣告支出的增加是因為這個嗎？還是有其他事情發生了？

It did have probably a small effect. But I think overall it was more of a normalized increase in overall keyword search. That's majority of our online spend. Advertising costs increased during the quarter. We saw increased competition as well with the vet clinics and also increased competition with online keyword searches as well. But we'll always attempt to be more aggressive during peak season, when our demand is strong. As you know, we have a flexible ad budget, and our advertising spending is also going to depend on the return on investment.

它確實可能有很小的影響。但我認為總體而言，這更像是整體關鍵字搜索的正常增長。這是我們在線支出的大部分。本季度廣告費用有所增加。我們看到獸醫診所的競爭也越來越激烈，在線關鍵字搜索的競爭也越來越激烈。但我們總是試圖在需求旺盛的旺季更加積極進取。如您所知，我們有靈活的廣告預算，我們的廣告支出也將取決於投資回報率。

Got it. Okay. And then last question for me. So now you're moving into the off-season. Typically, the gross margins for you guys are higher in the off-peak second fiscal -- second half of the fiscal year. So you had a nice improvement in the gross margin on a year-over-year basis as well as sequentially. So with that in mind, should we expect further sequential improvement, in the back half, of the gross margin? Or how should we think about that?

知道了。好的。然後是我的最後一個問題。所以現在你正在進入淡季。通常，你們的毛利率在非高峰期的第二財年——財年下半年更高。因此，您的毛利率同比和環比都有很好的改善。因此，考慮到這一點，我們是否應該期待毛利率在下半年進一步連續改善？或者我們應該如何考慮？

We don't manage the margins quarter-to-quarter. As you know, we sort of look at margins on an annualized basis. Meaning, annually, there's an opportunity for modest margin improvement year-over-year, and we expect that to continue. If there's an opportunity to maximize margins, we're going to go ahead and do that. But also, we want to remain competitive on the -- with pricing and, of course, with MAP pricing in place. And we also want to be competitive with the other players in our space as far as promotions and offers. So we'll see how it shapes up. But you're right, traditionally -- the trends have been historically that margins will rise during the off-season. And that's also because we tend to see more of a shift to prescription over OTC during those time periods.

我們不按季度管理利潤率。如您所知，我們按年計算利潤率。這意味著，每年都有機會實現利潤率同比適度改善，我們預計這種情況會持續下去。如果有機會最大化利潤，我們將繼續這樣做。而且，我們希望在定價方面保持競爭力，當然還有 MAP 定價。我們還希望在促銷和優惠方面與我們所在領域的其他參與者競爭。所以我們看看它會如何形成。但你是對的，傳統上——從歷史上看，利潤率會在淡季上升。這也是因為在那些時間段內，我們傾向於看到更多的處方轉向非處方藥。

(Operator Instructions) Our next question is from Ben Rose with Battle Road Research.

（操作員說明）我們的下一個問題來自 Battle Road Research 的 Ben Rose。

Few questions. First off, in terms of the advertising and promotion this quarter, was there anything done to perhaps incentivize or focus people more on the prescription side of the business? Or was this just sort of a natural trend back to your typical mix of prescription versus OTC?

很少有問題。首先，就本季度的廣告和促銷而言，是否採取了任何措施來激勵或關注人們更多地關注業務的處方方面？或者這只是一種自然趨勢，回到您典型的處方藥與非處方藥組合？

Yes. It was more of a movement to our typical trend. And again, we've always -- we have seen a rising increase in our mix more towards prescription than over-the-counter. Obviously, veterinarians are recommending more prescription products more so than OTC. And obviously, we prefer to be more skewed towards prescription, which have higher-margin profile. So it was more of a return to a normalized state, although I did mention prescription medications did see a bit of an uptick during this quarter, year-over-year. I think June was more of an anomaly. I think it was more so with both brick-and-mortar and veterinarians having limited hours. The new online -- new customers move towards online, and those online customers were purchasing over-the-counter products.

是的。這更像是我們典型趨勢的運動。再一次，我們一直——我們看到我們的組合越來越多地用於處方而不是非處方藥。顯然，獸醫比非處方藥更推薦處方藥。顯然，我們更傾向於處方藥，因為處方藥的利潤率更高。所以這更像是回到正常狀態，儘管我確實提到處方藥在本季度同比確實有所上升。我認為六月更像是一個反常現象。我認為實體店和獸醫的工作時間都有限，情況更是如此。新的在線——新客戶轉向在線，而這些在線客戶正在購買非處方產品。

Okay. Great. And sorry, Bruce, just to clarify 1 thing you said about the website redesign in the first phase. Did you say that that may have had a negative impact on the reorder rate this quarter?

好的。偉大的。抱歉，Bruce，我只是想澄清一下你在第一階段所說的關於網站重新設計的事情。您是否說這可能對本季度的再訂購率產生負面影響？

Yes, it's possible. With that new e-commerce platform, it had a negative impact on our natural search. So that took a while to get back to its normalized stage. We're there currently. We expect with many of the changes we have made, we should see an improvement in our new customer conversion in the future.

是的，這是可能的。有了這個新的電子商務平台，它對我們的自然搜索產生了負面影響。所以這需要一段時間才能回到正常化階段。我們目前在那裡。我們預計，通過我們所做的許多改變，我們應該會在未來看到新客戶轉化率的提高。

Okay. And on the inventory situation, it looks like you did work down quite a bit of inventory in the quarter, which was a concern of some heading into this quarter. In your prepared remarks, you mentioned that there were some delays in the slow to medium moving items, which I guess, in the grand scheme of things is less concerning. Can you speak to just the overall supply chain environment, albeit heading into the weaker season, but just your -- speak to the confidence of your own ability to procure the lion's share of the medications that you need?

好的。關於庫存情況，看起來你們在本季度確實減少了相當多的庫存，這是進入本季度的一些人的擔憂。在您準備好的發言中，您提到慢速到中速移動的項目有一些延遲，我想這在宏偉的計劃中並不那麼令人擔憂。你能談談整個供應鏈環境嗎，儘管進入了淡季，但你能談談你對自己採購大部分所需藥物的能力的信心嗎？

Right. Again, our inventory will fluctuate based on promotional buying opportunities. We mentioned that back in the June quarter, we did make a conscious decision to stock up due to the uncertainty that COVID presented itself. Overall, when there's a cost advantage, we'll carry higher inventory. During the pandemic, we did look to carry more inventory, to minimize any related delays. We did see those delays in some of our small to medium movers, more manufacture backorder type delays, also shipment or lead time delays. Some of those delays, we should be able to rectify with increased -- with an increased inventory purchase. Some we may not be able to. They're more manufactured-driven delays. So we'll see. Where we can stock up, we will. I would not expect the stock up like we saw in the June quarter, where inventories were in excess of $40 million. But we will try to stock up inventory to make sure that we can minimize any type of COVID-related delays for our customers.

正確的。同樣，我們的庫存將根據促銷購買機會而波動。我們提到，早在 6 月季度，由於 COVID 本身的不確定性，我們確實做出了有意識的囤貨決定。總體而言，當存在成本優勢時，我們將持有更高的庫存。在大流行期間，我們確實希望攜帶更多庫存，以盡量減少任何相關的延誤。我們確實在一些中小型搬運工中看到了這些延誤，更多的製造延期交貨類型的延誤，還有裝運或交貨時間延誤。其中一些延遲，我們應該能夠通過增加庫存採購來糾正。有些我們可能做不到。它們更多是製造驅動的延遲。所以我們拭目以待。在我們可以儲存的地方，我們會。我預計庫存不會像我們在 6 月季度看到的那樣增加，當時庫存超過 4000 萬美元。但我們會盡量儲備庫存，以確保我們可以為客戶最大程度地減少任何類型的與 COVID 相關的延誤。

The next one is from Kevin Ellich with Ace Research.

下一篇來自 Ace Research 的 Kevin Ellich。

So going back to the new customers that you added for the quarter, was a little bit lower than we've seen for -- in your fiscal second quarter over the last several years. With the V-shaped recovery we've seen in vet visits in the September quarter, do you think this is more a function of competition? Or what do you think is driving that?

因此，回到您在本季度添加的新客戶，比我們在過去幾年的第二財季看到的要少一些。隨著我們在 9 月季度的獸醫訪問中看到的 V 型複蘇，您認為這更多是競爭的結果嗎？或者你認為是什麼推動了這一點？

I mean, again, competition does play a role. I think more importantly, it was the combination -- as I mentioned, the combination of vet clinics and brick-and-mortar pet stores opening up. We also had that temporary negative effect on our natural search, which also affected possibly new customers as well. So as I mentioned, I think moving into the off-season, we definitely have an opportunity to improve on our new customers. I think overall, for the 6 months, we are fairly satisfied with the result. We'll continue to make improvements and tweak advertising where need be. And we'll see if we can rectify that temporary downswing.

我的意思是，競爭確實發揮了作用。我認為更重要的是，這是結合——正如我提到的，獸醫診所和實體寵物店的結合。我們也對我們的自然搜索產生了暫時的負面影響，這也可能影響了新客戶。所以正如我提到的，我認為進入淡季，我們肯定有機會改善我們的新客戶。我認為總的來說，對於這 6 個月，我們對結果相當滿意。我們將繼續在需要的地方進行改進和調整廣告。我們將看看我們是否可以糾正這種暫時的下滑。

Got it. Got it. And then it looks like -- one metric I'd track is new customer transaction size, which seems like it's been -- it's down a little bit this year. Do you think that's more a function of COVID, or is it MAP pricing or kind of all the above?

知道了。知道了。然後看起來——我跟踪的一個指標是新客戶交易規模，這似乎是——今年有所下降。你認為這更多是 COVID 的一個功能，還是 MAP 定價或以上所有的一種？

Yes. I'm not sure exactly what measures you're referring to. But overall, those definitely have a play when it comes to new order average size. Also with new orders, we do tend to be a little bit more promotional to attract new customers, to be competitive with others in our space.

是的。我不確定你指的是什麼措施。但總的來說，這些在新訂單平均規模方面肯定有作用。此外，對於新訂單，我們確實傾向於進行更多促銷以吸引新客戶，以便與我們所在領域的其他公司競爭。

Got it. Got it. And then lastly, CapEx was a little bit higher this quarter. Is that a function of the website? Just some seasonality spend?

知道了。知道了。最後，本季度資本支出略高。這是網站的功能嗎？只是一些季節性支出？

Correct. Yes, 100%. That was the website. And we really don't expect any material capital expenditures moving forward, more maintenance mode. And I mean, overall, it should be fairly minimal.

正確的。是的，100%。那是網站。而且我們真的不希望有任何實質性的資本支出向前推進，更多的維護模式。我的意思是，總的來說，它應該是相當小的。

Got it. And then lastly, again, gross margin much better than expected. I know, seasonally, Q2 is your strongest quarter probably of the year. Well, it's been a little indifferent in the last couple of years. But do you think we'll continue to see that sort of strength for the remainder of the year?

知道了。最後，毛利率再次好於預期。我知道，就季節性而言，第二季度可能是今年最強勁的季度。好吧，最近幾年有點冷漠。但您認為我們會在今年餘下的時間裡繼續看到這種強勁勢頭嗎？

As I mentioned to Anthony earlier, again, prices overall stabilized in the market with the manufacturers enforcing the minimum advertised price policies. Our product mix was different from what we saw in the June quarter. So those all contributed to increase to our margins. The bottom line is if we have increased prescription sales, we're going to probably have higher margins. The one area that could have a negative effect to margins would be promotions for new customers. So if we have a quarter where we're positive in new customers, that could have a negative impact on margins. But where the gross margins end up, will be dependent on our product mix. And again, looking at it from quarter-to-quarter can be difficult. But I think overall, year-over-year, we expect to see modest improvements in margins.

正如我之前對 Anthony 提到的，隨著製造商執行最低廣告價格政策，市場價格總體穩定。我們的產品組合與我們在 6 月季度看到的不同。所以這些都有助於增加我們的利潤。最重要的是，如果我們增加了處方藥銷售額，我們的利潤率可能會更高。可能對利潤率產生負面影響的一個領域是針對新客戶的促銷活動。因此，如果我們有一個季度對新客戶持積極態度，那可能會對利潤率產生負面影響。但毛利率最終將取決於我們的產品組合。同樣，逐個季度查看它可能很困難。但我認為總體而言，與去年同期相比，我們預計利潤率會適度改善。

We have a follow-up from Erin Wright with Crédit Suisse.

我們收到了 Erin Wright 與 Crédit Suisse 的後續報導。

Has anything changed in terms of your manufacturer relationships? I guess any new relationships? Or is it relatively status quo? And were there increases in that pricing? I guess how do those contracts typically work?

您與製造商的關係有什麼變化嗎？我想任何新的關係？還是相對現狀？該定價是否有所上漲？我想這些合同通常如何運作？

Right. Again, when we talk about the direct relationships with manufacturers, it's really talking about the large 5 manufacturers there. We do have direct relationships, which -- many -- at least 2 or 3 were initiated in 2019. So yes, we do have contractual relationships with them. They have been enforcing MAP pricing, which has stabilized prices in the online space. And what's helpful, when they have their price -- when manufacturers increase their prices, they also increase MAP. So that also helps as well, as far as margins and also the price inventory.

正確的。同樣，當我們談論與製造商的直接關係時，它實際上是在談論那裡的 5 大製造商。我們確實有直接關係，其中 - 很多 - 至少 2 或 3 是在 2019 年啟動的。所以是的，我們確實與他們有合同關係。他們一直在執行 MAP 定價，這穩定了在線空間的價格。有幫助的是，當他們有價格時——當製造商提高價格時，他們也會提高 MAP。因此，就利潤率和價格庫存而言，這也有幫助。

Okay. Great. And then 1 last question here just on generics. I guess do you have any metrics on the generic prescription dispensing rate versus brand? And (multiple speakers) has that changed at all given the manufacturer relationships?

好的。偉大的。然後是關於泛型的最後一個問題。我想你有關於通用處方配藥率與品牌的任何指標嗎？並且（多個揚聲器）考慮到製造商關係，這種情況是否發生了變化？

Yes. And we do. I mean, not materially -- I mean, many of the manufacturers prefer us to promote their brands, and they will give us incentives to promote their brands, say, over generics. But I would say our generics are up year-over-year. But overall, it's still about the same as a percentage of sales.

是的。我們做到了。我的意思是，不是物質上的——我的意思是，許多製造商更喜歡我們來推廣他們的品牌，他們會給我們激勵來推廣他們的品牌，比如說，而不是仿製藥。但我會說我們的仿製藥同比增長。但總的來說，它仍然與銷售額的百分比大致相同。

And there's still no, I guess, seamless way to do generic substitution, correct?

而且我猜，仍然沒有無縫的方法來進行通用替換，對嗎？

No. It doesn't. The current rules and regulations -- the pharmacy rules and regulations definitely prohibit that seamless generic substitution that is present for human pharmacies and for human physicians. So if there is a change, we do have to go back to the vet for their approval. So that does make it a little bit more difficult. But for the most part, our relationships with the vets are probably at the best point it's ever been. Our authorization rates are probably at its current peak. And -- so when we do go back to the vets for generic substitute, more often than not, their answer is yes.

不，它沒有。當前的規章制度——藥房規章制度明確禁止存在於人類藥房和人類醫生中的無縫仿製藥替代。所以如果有變化，我們必須回到獸醫那裡徵求他們的同意。所以這確實讓它變得有點困難。但在大多數情況下，我們與獸醫的關係可能處於有史以來最好的狀態。我們的授權率可能處於當前的峰值。而且——所以當我們回到獸醫那裡尋找通用替代品時，他們的回答往往是肯定的。

I will now turn our call back over to Bruce Rosenbloom, the company's Chief Financial Officer, for closing remarks.

我現在將電話轉回給公司首席財務官布魯斯·羅森布魯姆 (Bruce Rosenbloom) 以作結束語。

Thank you. In fiscal 2021, we are focusing on redesigning our website and mobile app to optimize our customers' digital experience. Thank you very much. This wraps up today's conference call. Thanks for joining us. Operator, this ends the conference call.

謝謝。在 2021 財年，我們將專注於重新設計我們的網站和移動應用程序，以優化客戶的數字體驗。非常感謝。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。

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

感謝大家參加今天的電話會議。您現在可以斷開連接。