PetMed Express, Inc. (NASDAQ:PETS) Q2 2019 Earnings Conference Call - Final Transcript

Oct 21, 2019 • 08:30 am ET

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PetMed Express, Inc. (NASDAQ:PETS) Q2 2019 Earnings Conference Call - Final Transcript

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Q & A
Executive
Menderes Akdag

Analyst
Kevin Ellich

Okay, got it. That makes sense. Bruce, really quickly, it looked like tax rate was a little bit higher than we were expecting, nothing major. But looks like it might have -- if it would have been 24%, like remodeling would have been $0.02, just wondering what was the bump up on tax rate?

Executive
Bruce S. Rosenbloom

Right. On the tax rate we -- every September quarter, we do have to reconcile our restricted stock compensation when they vest. And in the past, we've had what was called a windfall, which is actually a benefit for the last two or three years, because of the change in stock price, we actually had a charge of $322,000 in the quarter. So again, every September quarter, these restricted shares, they vest in July, and going forward that's when all of our restricted stock will probably be vesting, and so we'll have this type of charge. It could be a charge or could be a benefit, depending on the change in the stock price, from when the shares were issued, versus when they vest.

Got it. That makes a lot of sense. And then lastly Menderes, competition. Can you talk a little bit more about the competitive landscape, now that MAP is implemented, and then are you expecting any other major online retailers to jump into the pet prescription market ?

Executive
Menderes Akdag

Prices are -- as we have said, prices are stabilizing in the market with manufacturers enforcing MAP policies. And as far as -- we are not aware of anybody else. But that doesn't mean, they are not planning on entering the market.

Analyst
Kevin Ellich

Great. Thanks guys.

Operator
Operator

[Operator Instructions]. Our next question is from Anthony Lebiedzinski from Sidoti & Company. Your line is open.

Analyst
Anthony Lebiedzinski

Yes, good morning and thank you for taking the questions. So first, I was just wondering if you could perhaps comment on the progression of sales and gross margins during the quarter, was it kind of steady or was there a noticeable change between the months? And as far as the last manufacturer, that is now going to be selling directly, just wondering if you could perhaps comment on the percentages that you get from that manufacturer?

Executive
Menderes Akdag

Yeah, we're not, we are not going to comment on that. And we're not going to get into month to month reporting.

Analyst
Anthony Lebiedzinski

Okay, got it. That's fair. And then as far as your advertising strategy, so is it safe to assume it's going to be digital only at this point?

Executive
Menderes Akdag

Much more digital, yes. Majority is going to be digital.

Analyst
Anthony Lebiedzinski

Right, okay. So basically, the elimination of TV advertising was because, it was not cost efficient from your perspective, is that safe to say?

Executive
Menderes Akdag

That is correct, yes.

Analyst
Anthony Lebiedzinski

Got it. All right. And your outlook for just overall capital allocation priorities between buybacks and dividends, anything there you would like to comment on?

Executive
Menderes Akdag

We don't have anything else at this time. We do look at acquisition opportunities during normal course of business.

Analyst
Anthony Lebiedzinski

Got it. Okay, and