PETMED EXPRESS INC Q4 FY2022 earnings call

• Fiscal 2023 sales were $257 million, a 6% decrease from the prior year, with the business starting to stabilize. - Completed acquisition of PetCareRx, which expands the product catalog and distribution capabilities. - Fourth quarter saw net new customer growth of 12%, and AutoShip & Save sales at 44% of revenue. - OTC medication faced aggressive price discounting, but the Rx side had less price pressure. - Partnering with Purina to launch prescription and premium food next quarter, and migrating pharmaceutical supplier agreements from PetCareRx to PetMeds for benefits like improved marketing cooperative funds.

Fourth quarter sales were $62.4 million, a 5% decrease from the prior year's $66 million. Net new customers for the quarter were approximately 72,000, representing a 12% year-over-year increase. AutoShip & Save sales accounted for 44% of total revenue in the fourth quarter, up from 31% in the same period last year. Repeat sales were $56 million, a 6% decline year-over-year, with the OTC medication category experiencing aggressive price discounting. Gross profit as a percentage of sales was 27.9% in the quarter, compared to 29.4% for the same quarter last year.

• Expect growth in new customers and a stabilized recurring sales base in the upcoming fiscal year. - Aim for healthy top line revenue growth while keeping fixed costs stable. - Anticipate leverage in the P&L as revenue scales with the integration of PetCareRx. - Focus on operational execution of recent partnerships and investments.

• Aggressive price discounting in the OTC medication market from competitors. - Uncertainties related to the integration of PetCareRx and other investments.

Q: Corey Grady wanted to follow up on flea and tick season impact on sales and talk about cash priorities and capital return strategy.

A: Matt Hulett said majority of the decline in sales was due to OTC flea and tick medication price discounting; Christine Chambers said dividend is reviewed quarterly with a focus on business growth and long-term stock appreciation and free cash flow generation.

Q: Anthony Lebiedzinski asked about weather impact on Q4 sales and operational synergies of PetCareRx.

A: Matt Hulett said weather had less impact than OTC trends; Matt Hulett said PetCareRx team integration exceeded expectations, with good revenue and cost integration progress including scale benefits and cost streamlining