PetMed Express D/B/A 1-800-PetMeds Announces Its Second Quarter Financial Results and Its $0.19 Per Share Quarterly Dividend


 Second Quarter Net Income Increased 9% 
Second Quarter Sales Increased 7%

POMPANO BEACH, Fla., Oct. 24, 2016 (GLOBE NEWSWIRE) -- PetMed Express, Inc. (NASDAQ:PETS) today announced its financial results for the quarter ended September 30, 2016.  Net income was $4.9 million, or $0.24 diluted per share, compared to net income of $4.5 million, or $0.22 diluted per share, for the quarter ended September 30, 2015, an 8.8% increase to net income.  Net income for the six months ended September 30, 2016 was $11.5 million, or $0.56 diluted per share, compared to net income of $10.3 million, or $0.51 diluted per share, for the six months ended September 30, 2015, a 12% increase to net income.  Net sales for the quarter ended September 30, 2016 were $60.8 million, compared to $56.7 million for the quarter ended September 30, 2015, an increase of 7.2%.  Net sales for the six months ended September 30, 2016 were $133.3 million, compared to $128.4 million for the six months ended September 30, 2015, an increase of 3.8%.  New order sales increased 6.3% to $10.7 million for the quarter ended September 30, 2016, compared to $10.1 million for the same quarter in the prior year.  The Company’s online sales for the quarter ended September 30, 2016 were approximately 82% of all sales, compared to 81% for the same quarter the prior year. 

Menderes Akdag, CEO and President, commented: “During the September quarter we saw increases in both our new order and reorder sales, with reorder sales increasing 7.4% to $50.1 million for the quarter ended September 30, 2016 compared to $46.7 million for the same quarter the prior year.  Our new customer acquisition costs were reduced to $33 for the quarter ended September 30, 2016, compared to $49 for the same period in the prior year.   We also saw continued improvement on our bottom line results for the quarter ended September 30, 2016, due to a reduction in our operating expenses, which decreased by about 384 basis points, attributable to a reduction in advertising spending.  Cash flow from operations was $27.8 million for the six month ended September 30, 2016, compared to $14.0 million for the six month ended September 30, 2015, with a majority of the increase due to a reduction in inventory.  We are currently preparing to move into our new corporate headquarters and distribution facility, which is expected to occur in our third fiscal quarter.”

The Board of Directors declared a quarterly dividend of $0.19 per share on the Company’s common stock.  The dividend will be payable on November 18, 2016, to shareholders of record at the close of business on November 7, 2016.  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 October 24, 2016 until November 7, 2016 at 11:59 P.M.  To access the replay, call (800) 839-2310 (toll free) or (203) 369-3635 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, 2016.  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, except for per share data)
         
   September 30,  March 31, 
   2016 
  2016 
   (Unaudited)     
ASSETS        
         
Current assets:        
Cash and cash equivalents $51,896  $37,639 
Accounts receivable, less allowance for doubtful        
accounts of $10 and $13, respectively  1,369   1,724 
Inventories - finished goods  14,820   25,586 
Prepaid expenses and other current assets  6,486   2,435 
Prepaid income taxes  21   243 
Total current assets  74,592   67,627 
         
Noncurrent assets:        
Property and equipment, net  20,576   20,929 
Intangible assets  860   860 
Deferred tax assets  499   863 
Total noncurrent assets  21,935   22,652 
         
Total assets $96,527  $90,279 
         
LIABILITIES AND SHAREHOLDERS' EQUITY        
         
Current liabilities:        
Accounts payable $6,147  $5,004 
Accrued expenses and other current liabilities  2,416   2,080 
Total liabilities  8,563   7,084 
         
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;        
20,527 and 20,447 shares issued and outstanding, respectively  21   20 
Additional paid-in capital  5,932   4,871 
Retained earnings  82,002   78,295 
         
Total shareholders' equity  87,964   83,195 
         
Total liabilities and shareholders' equity $96,527  $90,279 
         


 PETMED EXPRESS, INC. AND SUBSIDIARIES 
 CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME 
 (In thousands, except for per share amounts) (Unaudited) 
                
   Three Months Ended    Six Months Ended 
   September 30,    September 30, 
  2016    2015   2016    2015 
                    
Sales$ 60,791  $ 56,725  $ 133,278  $ 128,359 
Cost of sales  42,727    37,812    92,762    86,480 
                
Gross profit  18,064    18,913    40,516    41,879 
                    
Operating expenses:                   
General and administrative  5,747    5,388    11,845    11,187 
Advertising  4,382    6,249    10,142    14,134 
Depreciation  204    186    398    377 
Total operating expenses  10,333    11,823    22,385    25,698 
                
Income from operations  7,731    7,090    18,131    16,181 
                
Other income:               
Interest income, net  32    55    60    105 
Other, net  23    (4)   76    (8)
Total other income  55    51    136    97 
                
Income before provision for income taxes  7,786    7,141    18,267    16,278 
                
Provision for income taxes  2,887    2,639    6,774    6,019 
                
Net income$ 4,899  $ 4,502  $ 11,493  $ 10,259 
                
Net change in unrealized gain (loss) on short               
term investments  -    16    -    (19)
                
Comprehensive income$ 4,899  $ 4,518  $ 11,493  $ 10,240 
                
Net income per common share:               
Basic$ 0.24  $ 0.22  $ 0.57  $ 0.51 
Diluted$ 0.24  $ 0.22  $ 0.56  $ 0.51 
                
Weighted average number of common shares outstanding:               
Basic  20,234    20,126    20,208    20,100 
Diluted  20,377    20,246    20,355    20,222 
                
Cash dividends declared per common share$ 0.19  $ 0.18  $ 0.38  $ 0.36 
                


PETMED EXPRESS, INC. AND SUBSIDIARIES 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS 
 (In thousands) (Unaudited)  
  
    Six Months Ended  
    September 30,  
    2016    2015  
Cash flows from operating activities:       
Net income $ 11,493  $ 10,259  
Adjustments to reconcile net income to net cash       
provided by operating activities:       
Depreciation   398    377  
Share based compensation   946    777  
Deferred income taxes   364    4  
Bad debt expense   352    227  
(Increase) decrease in operating assets       
and increase (decrease) in liabilities:       
Accounts receivable   3    81  
Inventories - finished goods   10,765    664  
Prepaid income taxes   222    (60) 
Prepaid expenses and other current assets   1,764    (86) 
Accounts payable   1,143    2,125  
Income taxes payable   -    (50) 
Accrued expenses and other current liabilities   335    (277) 
Net cash provided by operating activities   27,785    14,041  
        
Cash flows from investing activities:       
Net change in investments   -    (33) 
Purchases of property and equipment   (5,859)   (175) 
Net cash used in investing activities   (5,859)   (208) 
        
Cash flows from financing activities:       
Dividends paid   (7,784)   (7,358) 
Excess tax benefits related to restricted stock   115    92  
Net cash used in financing activities   (7,669)   (7,266) 
        
Net increase in cash and cash equivalents   14,257    6,567  
Cash and cash equivalents, at beginning of period   37,639    35,613  
        
Cash and cash equivalents, at end of period $ 51,896  $ 42,180  
        
Supplemental disclosure of cash flow information:       
        
Cash paid for income taxes $ 6,186  $ 6,033  
        
Prepaid property and equipment in current assets $ 5,815  $ -  
        
Dividends payable in accrued expenses $ 144  $ 154