Net Income Increased 5.6%
Gross Margins Increased 98 basis points
POMPANO BEACH, Fla., Jan. 20, 2015 (GLOBE NEWSWIRE) -- PetMed Express, Inc. (Nasdaq:PETS) today announced its financial results for the quarter ended December 31, 2014. Net income was $4.8 million, or $0.24 diluted per share, for the quarter ended December 31, 2014, compared to net income of $4.5 million, or $0.23 diluted per share, for the quarter ended December 31, 2013, an increase to net income of 5.6%. Excluding a one-time charge for an IT-related discontinued project in the quarter ended September 30, 2014, net income for the nine months ended December 31, 2014 was $13.6 million, or $0.67 diluted per share, compared to net income of $13.4 million, or $0.67 diluted per share, for the nine months ended December 31, 2013, an increase to net income of 1.0%. The one-time IT-related discontinued project cost of $1.7 million was expensed in the September quarter. The after tax net impact of this charge was $1.1 million, or $0.05 diluted per share. There are no further charges expected in the future related to this discontinued project.
Net sales for the quarter ended December 31, 2014 were $49.3 million, compared to $50.1 million for the quarter ended December 31, 2013, a decrease of 1.6%. Net sales for the nine months ended December 31, 2014 were $179.4 million, compared to $184.8 million for the quarter ended December 31, 2013, a decrease of 2.9%. The Company's online sales for the quarter ended December 31, 2014 were approximately 80% of all sales, compared to 79% for the same quarter the prior year.
Menderes Akdag, President and CEO, commented: "During the quarter we were able to increase gross profit margins and average order size. For the quarter ended December 31, 2014 our gross margins increased 98 basis points, which can be attributed to a shift in sales to higher margin items. Our average order size increased to $76 for the December quarter, compared to $72 for the same period in the prior year. For the quarter ended December 31, 2014, our operational expenses decreased by 51 basis points, mainly due to a reduction in advertising spending. Cash flow from operations was $29.5 million for the quarter ended December 31, 2014, compared to $17.7 million for the quarter ended December 31, 2013. For the remainder of Fiscal 2015 we are focusing on improving our marketing efforts to increase sales."
The Board of Directors declared a quarterly dividend of $0.17 per share on the Company's common stock. The dividend will be payable on February 13, 2015, to shareholders of record at the close of business on February 3, 2015. The Company intends to continue to pay regular quarterly dividends; however the declaration and payment of future dividends is discretionary and will be subject to a determination by the Board of Directors each quarter following its review of the Company's financial performance.
This morning at 8:30 A.M. Eastern Time, Mr. Akdag will host a conference call to review the quarter's financial results. To access the call, which is open to the public, please dial (888) 455-1758 (toll free) or (203) 827-7025. Callers will be required to supply PETMEDS as the passcode. For those unable to participate in the live event, the call will be available for replay from 10:00 A.M. on January 20, 2015 until February 3, 2015 at 11:59 P.M. To access the replay, call (866) 430-8791 (toll free) or (203) 369-0938 and enter passcode 5500.
Founded in 1996, PetMed Express is America's Largest Pet Pharmacy, delivering prescription and non-prescription pet medications and other health products for dogs and cats at competitive prices direct to the consumer through its 1-800-PetMeds toll free number and on the Internet through its website at www.1800petmeds.com.
This press release may contain "forward-looking" statements, as defined in the Private Securities Litigation Reform Act of 1995 or by the Securities and Exchange Commission, that involve a number of risks and uncertainties, including the Company's ability to meet the objectives included in its business plan. Important factors that could cause results to differ materially from those indicated by such "forward-looking" statements are set forth in Management's Discussion and Analysis of Financial Condition and Results of Operations in the PetMed Express Annual Report on Form 10-K for the year ended March 31, 2014. The Company's future results may also be impacted by other risk factors listed from time to time in its SEC filings, including, but not limited to, the Company's Form 10-Q and its Annual Report on Form 10-K.
For investment relations contact PetMed Express, Inc., Bruce S. Rosenbloom, CFO, 954-979-5995.
| PETMED EXPRESS, INC. AND SUBSIDIARIES | ||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||
| (In thousands) | ||
| December 31, | March 31, | |
| 2014 | 2014 | |
| ASSETS | (Unaudited) | |
| Current assets: | ||
| Cash and cash equivalents | $ 37,068 | $ 18,305 |
| Short term investments - available for sale | 15,579 | 15,539 |
| Accounts receivable, less allowance for doubtful accounts of $5 and $7, respectively | 1,352 | 1,761 |
| Inventories - finished goods | 21,613 | 35,727 |
| Prepaid expenses and other current assets | 1,280 | 1,761 |
| Deferred tax assets | 863 | 1,062 |
| Prepaid income taxes | -- | 54 |
| Total current assets | 77,755 | 74,209 |
| Noncurrent assets: | ||
| Prepaid expenses | -- | 1,996 |
| Property and equipment, net | 1,222 | 1,310 |
| Intangible assets | 860 | 860 |
| Deferred tax assets | 5 | -- |
| Total assets | $ 79,842 | $ 78,375 |
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||
| Current liabilities: | ||
| Accounts payable | $ 3,876 | $ 5,768 |
| Accrued expenses and other current liabilities | 2,136 | 2,325 |
| Income taxes payable | 283 | -- |
| Total current liabilities | 6,295 | 8,093 |
| Deferred tax liabilities | -- | 65 |
| Total liabilities | 6,295 | 8,158 |
| Commitments and contingencies | ||
| Shareholders' equity: | ||
| Preferred stock, $.001 par value, 5,000 shares authorized; 3 convertible shares issued and outstanding with a liquidation preference of $4 per share | 9 | 9 |
| Common stock, $.001 par value, 40,000 shares authorized; 20,263 and 20,190 shares issued and outstanding, respectively | 20 | 20 |
| Additional paid-in capital | 2,735 | 1,578 |
| Retained earnings | 70,833 | 68,647 |
| Accumulated other comprehensive loss | (50) | (37) |
| Total shareholders' equity | 73,547 | 70,217 |
| Total liabilities and shareholders' equity | $ 79,842 | $ 78,375 |
| PETMED EXPRESS, INC. AND SUBSIDIARIES | ||||
| CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||
| (In thousands, except for per share amounts) (Unaudited) | ||||
| Three Months Ended | Nine Months Ended | |||
| December 31, | December 31, | |||
| 2014 | 2013 | 2014 | 2013 | |
| Sales | $ 49,284 | $ 50,086 | $ 179,401 | $ 184,759 |
| Cost of sales | 32,184 | 33,197 | 120,070 | 124,605 |
| Gross profit | 17,100 | 16,889 | 59,331 | 60,154 |
| Operating expenses: | ||||
| General and administrative | 4,946 | 5,106 | 16,202 | 16,484 |
| Advertising | 4,323 | 4,517 | 21,134 | 21,896 |
| Discontinued project costs | -- | -- | 1,714 | -- |
| Depreciation | 165 | 219 | 487 | 697 |
| Total operating expenses | 9,434 | 9,842 | 39,537 | 39,077 |
| Income from operations | 7,666 | 7,047 | 19,794 | 21,077 |
| Other income: | ||||
| Interest income, net | 50 | 46 | 138 | 141 |
| Other, net | (4) | (3) | 3 | (5) |
| Total other income | 46 | 43 | 141 | 136 |
| Income before provision for income taxes | 7,712 | 7,090 | 19,935 | 21,213 |
| Provision for income taxes | 2,915 | 2,549 | 7,433 | 7,767 |
| Net income | $ 4,797 | $ 4,541 | $ 12,502 | $ 13,446 |
| Net change in unrealized gain (loss) on short term investments | (20) | 9 | (13) | (36) |
| Comprehensive income | $ 4,777 | $ 4,550 | $ 12,489 | $ 13,410 |
| Net income per common share: | ||||
| Basic | $ 0.24 | $ 0.23 | $ 0.62 | $ 0.68 |
| Diluted | $ 0.24 | $ 0.23 | $ 0.62 | $ 0.67 |
| Weighted average number of common shares outstanding: | ||||
| Basic | 20,038 | 19,925 | 20,005 | 19,892 |
| Diluted | 20,162 | 20,079 | 20,133 | 20,042 |
| Cash dividends declared per common share | $ 0.17 | $ 0.17 | $ 0.51 | $ 0.49 |
| PETMED EXPRESS, INC. AND SUBSIDIARIES | ||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||
| (In thousands) (Unaudited) | ||
| Nine Months Ended | ||
| December 31, | ||
| 2014 | 2013 | |
| Cash flows from operating activities: | ||
| Net income | $ 12,502 | $ 13,446 |
| Adjustments to reconcile net income to net cash provided by operating activities: | ||
| Depreciation | 487 | 697 |
| Share based compensation | 1,118 | 1,105 |
| Discontinued project costs | 1,714 | -- |
| Deferred income taxes | 129 | (84) |
| Bad debt expense | 66 | 75 |
| (Increase) decrease in operating assets and increase (decrease) in liabilities: | ||
| Accounts receivable | 343 | (286) |
| Inventories - finished goods | 14,114 | 7,060 |
| Prepaid income taxes | 54 | (165) |
| Prepaid expenses and other current assets | 763 | (1,449) |
| Accounts payable | (1,892) | (2,411) |
| Income taxes payable | 283 | (162) |
| Accrued expenses and other current liabilities | (153) | (152) |
| Net cash provided by operating activities | 29,528 | 17,674 |
| Cash flows from investing activities: | ||
| Net change in investments | (53) | (62) |
| Purchases of property and equipment | (398) | (39) |
| Net cash used in investing activities | (451) | (101) |
| Cash flows from financing activities: | ||
| Dividends paid | (10,353) | (9,914) |
| Tax adjustment related to restricted stock | 39 | 123 |
| Net cash used in financing activities | (10,314) | (9,791) |
| Net increase in cash and cash equivalents | 18,763 | 7,782 |
| Cash and cash equivalents, at beginning of period | 18,305 | 18,155 |
| Cash and cash equivalents, at end of period | $ 37,068 | $ 25,937 |
| Supplemental disclosure of cash flow information: | ||
| Cash paid for income taxes | $ 6,929 | $ 7,776 |
| Dividends payable in accrued expenses | $ 225 | $ 241 |