PetMed Express(US:PETS)2022-05-10 01:45Financial Data and Key Metrics Changes - Fourth quarter sales were USD66 million, a decrease of 7.9% compared to USD71.7 million for the same period last year [30] - Net income for the fourth quarter was USD6.1 million, or USD0.30 diluted per share, down from USD6.8 million, or USD0.34 diluted earnings per share, reflecting an 11% decrease [36] - Adjusted EBITDA for the fourth quarter was USD9.5 million, or USD0.47 on a diluted basis, down 8.4% from USD10.4 million, or USD0.52 on a diluted basis, for the same quarter last year [37][38] Business Line Data and Key Metrics Changes - The AutoShip & Save subscription program accounted for approximately 37% of revenue in March, a 41% increase from the previous quarter [9][32] - New order sales decreased by 35% to USD4.9 million for the quarter, compared to USD7.4 million for the same quarter last year [33] - Reorder sales decreased by 4.8% to USD61.1 million for the quarter, compared to USD64.2 million for the same quarter last year [34] Market Data and Key Metrics Changes - The U.S. pet market is over USD100 billion in annual sales and is expected to reach USD120 billion by 2024, with the addressable pet medication market at approximately USD10 billion [11] - The company operates in a growing market with favorable trends towards digital retail, as 7 out of 10 U.S. households own pets [14][15] Company Strategy and Development Direction - The company is transitioning from a leading pet medication retailer to a market leader in expert pet healthcare, focusing on nutrition, medications, wellness, and care [43] - A strategic partnership with Vetster was announced to enhance telemedicine capabilities, marking a significant step in the company's pet health expert strategy [10][48] Management's Comments on Operating Environment and Future Outlook - Management noted that revenue declines have begun to moderate, with expectations for sales in flea and tick categories to rebound as temperatures rise [6] - The company is committed to becoming a higher-growth entity while maintaining a strong balance sheet with no debt and approximately USD111 million in cash [25][38] Other Important Information - The Board of Directors declared a quarterly dividend of USD0.30 per share, payable on May 27, 2022 [39] - The company has a strong customer base with over 2 million pet parents having purchased from them in the last two years, and an NPS score over 80 [26] Q&A Session Summary Question: What are the demand trends for flea and tick season? - Management acknowledged a slow start to the flea and tick season due to colder weather in March, but expressed confidence in a rebound as temperatures rise [54][56] Question: How should advertising spend be framed for fiscal 2023? - Advertising spend was down about USD800,000 or 20% from the previous year, with expectations to maintain similar spending levels but with improved efficiency [60] Question: What are the financial contributions expected from the telemedicine partnership? - Management did not provide specific guidance on the financial impact of the telemedicine partnership but expressed excitement about the potential growth opportunities it presents [58][59] Question: Should future transactions be expected to be of similar size to Vetster? - Management indicated that they are open to various types of partnerships and investments, including M&A, as they seek to fill gaps in their service offerings [70][71]