{
  "docId": "019dd923-622c-750b-8b98-a3d302cd2d9a",
  "docSlug": "2692179b6d0b",
  "documentTitle": "PetIQ, Inc. (PETQ)",
  "authorId": "54_Spruce_Point_Capital",
  "authorName": null,
  "documentKindSlug": "activist-deck",
  "documentKindLabel": "Activist deck",
  "sourceTypeSlug": "short_seller",
  "sourceTypeLabel": "Short seller",
  "presentationDate": "2019-04-30 00:00:00",
  "orientation": "landscape",
  "aspectRatio": 1.3333334,
  "pageNumber": 68,
  "pageCount": 96,
  "prevPage": 67,
  "nextPage": 69,
  "slideType": "expose_contradiction",
  "function": "expose_contradiction",
  "density": "overcrowded",
  "nDataPoints": 28,
  "notes": "Uses a red arrow to visually link the CEO's quotes to the financial data table, highlighting the contradiction.",
  "elementsJson": [
    "headline_text",
    "paragraph",
    "callout_box",
    "quote_block",
    "data_table"
  ],
  "metadataConfidence": 1,
  "imagePath": null,
  "slideHref": "/slides/019dd923-622c-750b-8b98-a3d302cd2d9a/68",
  "deckHref": "/decks/019dd923-622c-750b-8b98-a3d302cd2d9a",
  "deckJsonHref": "/decks/019dd923-622c-750b-8b98-a3d302cd2d9a.json",
  "deckAnchorHref": "/decks/019dd923-622c-750b-8b98-a3d302cd2d9a#slide-68",
  "components": [
    {
      "bbox": {
        "h": 0.12,
        "w": 0.45,
        "x": 0.51,
        "y": 0.33
      },
      "kind": "callout",
      "text": "Management was certainly aware that up to 45% of VIP revenue was attributable to the sale of products to PetIQ. Why was management not forthright about the magnitude of their prior business relationship? Why was it mentioned only in passing two months after the initial M&A call?",
      "attrs": null,
      "subkind": "primary",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "4dc8e66a-f0fe-460b-9551-55cc856e6413",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.08,
        "w": 0.45,
        "x": 0.51,
        "y": 0.88
      },
      "kind": "callout",
      "text": "To what extent was VIP a “services business” if close to half of its revenue came from product sales just to PetIQ (and even more of its revenue from the sale of product to other distributors and/or retailers)?",
      "attrs": null,
      "subkind": "primary",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "e6c08159-3650-4d10-866c-6d3d013a45b2",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": null,
      "kind": "callout",
      "text": "Management was certainly aware that up to 45% of VIP revenue was attributable to the sale of products to PetIQ.",
      "attrs": null,
      "subkind": null,
      "toolName": "Visual emphasis",
      "toolSlug": "visual-emphasis",
      "confidence": null,
      "componentId": "019dd952-ee3c-76df-965f-bdf9321e651c",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.03,
        "w": 0.43,
        "x": 0.02,
        "y": 0.8
      },
      "kind": "list",
      "text": "Modeling Guidance Call: Apr 2, 2018",
      "attrs": null,
      "subkind": "bullet",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "0ebf62cd-9795-4785-bb85-80594a22fa5b",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.03,
        "w": 0.43,
        "x": 0.02,
        "y": 0.33
      },
      "kind": "list",
      "text": "Post-Acquisition Conference Call: Jan 9, 2018",
      "attrs": null,
      "subkind": "bullet",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "e0b805b2-7364-4f5e-9720-1b68b15c4aa8",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.12,
        "w": 0.96,
        "x": 0.02,
        "y": 0.17
      },
      "kind": "paragraph",
      "text": "PetIQ announced the VIP acquisition on Jan 5, 2018. We can be certain that buyout talks and related negotiations between PetIQ and VIP extended back to at least Q4 FY17. Moreover, management boasts that it conducted a $500K consulting study several months earlier to justify PetIQ’s move into the services industry. We believe the acquisition was likely contemplated for at least six months prior to the acquisition, which closed on Jan 17, 2018. Yet management’s statements regarding the prior business relationship between PetIQ and VIP – with which, by Jan 2018, management should have been intimately aware – appear contradictory. We wonder why management was not able to give a more straight-forward characterization of the relationship to investors.",
      "attrs": null,
      "subkind": "paragraph",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "fa3f41f1-0172-4778-94dc-2bef46cc2332",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.08,
        "w": 0.43,
        "x": 0.02,
        "y": 0.38
      },
      "kind": "quote",
      "text": "We have developed a great working relationship with VIP and have historically been one of their hosts of business customers. - McCord Christensen – CEO, PetIQ",
      "attrs": null,
      "subkind": "testimonial",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "0c48183e-2cf3-41fe-817e-db6e6953a36e",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.1,
        "w": 0.43,
        "x": 0.02,
        "y": 0.85
      },
      "kind": "quote",
      "text": "Intercompany sales eliminations were $111 million for full year 2017. As a reminder, PetIQ previously acted as a customer of VIP for certain distributed products. This was done at the direction of PetIQ’s animal health manufacturer partners. - John Newland – CFO, PetIQ",
      "attrs": null,
      "subkind": "testimonial",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "1091bb31-1211-435a-a184-40ad82cafb48",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.1,
        "w": 0.43,
        "x": 0.02,
        "y": 0.61
      },
      "kind": "quote",
      "text": "We were introduced to VIP a couple of years ago and had been doing business with VIP across the number of our harder-to-acquire items as they’ve had some distribution rights that allow them to do business with us. - McCord Christensen – CEO, PetIQ",
      "attrs": null,
      "subkind": "testimonial",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "15ec34ed-39c7-4d8a-9d10-42788e2246e8",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.08,
        "w": 0.43,
        "x": 0.02,
        "y": 0.48
      },
      "kind": "quote",
      "text": "We’re very, very different business in the sense that we’re solely products-focused and their primary business is the services side. - McCord Christensen – CEO, PetIQ",
      "attrs": null,
      "subkind": "testimonial",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "f2cffccc-8ea1-493f-8d77-65126d2d2b8e",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": null,
      "kind": "quote",
      "text": "\"We have developed a great working relationship with VIP and have historically been one of their hosts of business customers.\" — McCord Christensen, CEO, PetIQ; \"We're very, very different business in the sense that we're solely products-focused and their primary business is the services side.\" — McCord Christensen, CEO, PetIQ; \"We were introduced to VIP a couple of years ago and had been doing business with VIP across the number of our harder-to-acquire items as they've had some distribution rights that allow them to do business with us.\" — McCord Christensen, CEO, PetIQ; \"Intercompany sales eliminations were $111 million for full year 2017. As a reminder, PetIQ previously acted as a customer of VIP for certain distributed products. This was done at the direction of PetIQ's animal health manufacturer partners.\" — John Newland, CFO, PetIQ",
      "attrs": null,
      "subkind": null,
      "toolName": "Authority citation",
      "toolSlug": "authority-citation",
      "confidence": null,
      "componentId": "019dd952-ee3c-76df-965f-c107afcc230d",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.35,
        "w": 0.45,
        "x": 0.51,
        "y": 0.48
      },
      "kind": "table",
      "text": "UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS DATA FOR THE YEAR ENDED DECEMBER 31, 2017",
      "attrs": null,
      "subkind": "data",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "aabc7b1e-5192-4f3a-a5d3-e1b713b2177e",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.08,
        "w": 0.65,
        "x": 0.31,
        "y": 0.03
      },
      "kind": "title",
      "text": "Management Not Forthright About PetIQ And VIP's Close Pre-Acquisition Relationship",
      "attrs": null,
      "subkind": "headline",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "3e80b032-cbd4-414b-a50e-9536ebd01fdb",
      "frameworkName": null,
      "frameworkSlug": null
    }
  ],
  "metrics": [],
  "tools": [],
  "frameworks": [],
  "arcBeats": [
    {
      "to": 95,
      "from": 6,
      "beatId": "96b19703-73d7-4b02-a51b-72443d554cee",
      "arcName": "Overcoming the Monster",
      "arcSlug": "overcoming-monster",
      "beatName": "Expose Contradiction",
      "beatSlug": null,
      "evidence": "Detailed critique of PetIQ's business practices, financials, and valuation",
      "position": 1,
      "confidence": 0.8,
      "parentBeatName": null,
      "parentBeatSlug": null
    }
  ],
  "loops": [],
  "imagePathAlt": null,
  "thumbSrc": null,
  "thumbSrcAlt": null,
  "locked": true
}