PetMed Express d/b/a 1-800-PetMeds Announces Its Second Fiscal Quarter Financial Results and Its Quarterly Dividend of $0.27 per Share


Quarterly Reorder Sales Increased 1.4%
Gross Margins Improved Sequentially from 27.3% to 28.6%
Operating Margins Increased 430 Basis Points Sequentially

DELRAY BEACH, Fla., Oct. 21, 2019 (GLOBE NEWSWIRE) -- PetMed Express, Inc. (NASDAQ: PETS) today announced its financial results for the quarter ended September 30, 2019.  Net sales for the quarter ended September 30, 2019 were $69.9 million, compared to $71.4 million for the quarter ended September 30, 2018, a decrease of 2.0%.  Net income was $6.7 million, or $0.33 diluted per share, for the quarter ended September 30, 2019, compared to net income of $10.8 million, or $0.52 diluted per share, for the quarter ended September 30, 2018, a 36% decrease in diluted earnings per share.  Reorder sales increased 1.4%, to $61.9 million for the quarter ended September 30, 2019, compared to $61.0 million for the same quarter in the prior year. 

Menderes Akdag, CEO and President, commented: “We were encouraged with improvements to our reorder sales and gross and operating margins during the quarter. Gross margins improved by 130 basis points from 27.3% in the June quarter to 28.6% in the September quarter, and operating margins improved by 430 basis points from 7.7% in the June quarter to 12.0% in the September quarter.  The gross margin increase can be attributed to our success in obtaining direct purchasing relationships with the major manufacturers, and the implementation of the minimum advertised price (MAP) policy by some of the major manufacturers.  We anticipate MAP pricing to stabilize pet medication prices throughout the online channel.  We made further progress in October, and we now have direct relationships with all of the major manufacturers, which may help further improve our gross margins in the future.  We are also pleased to announce that on September 1st we launched our new PetMeds® Rewards Program.  This customer loyalty program allows our customers to accrue points to receive additional discounts on future orders.  This program will increase our engagement with our customer base and should help promote future reorder sales.  Net cash from operations for the six months ended September 30, 2019 was $17.3 million, compared to $20.4 million for the same period last year.  In fiscal 2020, we will continue to be price competitive and will focus on optimizing our marketing in this more competitive environment and being more efficient with our advertising spending.  In addition, we will be investing in our e-commerce platform to better service our customers.  This platform will enable us to improve upon our already strong net promoter score of 83.5%.  We believe this customer satisfaction measure reflects the strong bond we have with our customers and will assist the Company with future customer retention.”

The Board of Directors declared a quarterly dividend of $0.27 per share on the Company’s common stock.  The dividend will be payable on November 15, 2019, to shareholders of record at the close of business on November 4, 2019.  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 21, 2019 until November 4, 2019 at 10:59 P.M Eastern Time.  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, cats, and horses 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, 2019.  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, 561-526-4444.



PETMED EXPRESS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
     
  September 30, March 31,
  2019 2019
ASSETS (Unaudited)  
     
Current assets:    
Cash and cash equivalents$94,897$100,529
Accounts receivable, less allowance for doubtful    
accounts of $22 and $39, respectively 1,466 2,542
Inventories - finished goods 19,061 21,370
Prepaid expenses and other current assets 2,841 1,408
Prepaid income taxes - 582
Total current assets 118,265 126,431
     
Noncurrent assets:    
Property and equipment, net 26,412 27,136
Intangible assets 860 860
Total noncurrent assets 27,272 27,996
     
Total assets$145,537$154,427
     
LIABILITIES AND SHAREHOLDERS' EQUITY    
     
Current liabilities:    
Accounts payable$15,155$16,275
Accrued expenses and other current liabilities 2,871 2,351
Income taxes payable 525 -
Total current liabilities 18,551 18,626
     
Deferred tax liabilities 1,395 1,121
     
Total liabilities 19,946 19,747
     
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;    
20,175 and 20,674 shares issued and outstanding, respectively 20 21
Additional paid-in capital 2,347 12,478
Retained earnings 123,215 122,172
     
Total shareholders' equity 125,591 134,680
     
Total liabilities and shareholders' equity$145,537$154,427
     



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,
  2019 2018 2019 2018
         
Sales$69,936$71,396$149,924$158,786
Cost of sales 49,934 46,141 108,061 103,577
         
Gross profit 20,002 25,255 41,863 55,209
         
Operating expenses:        
General and administrative 6,303 6,200 12,811 13,134
Advertising 4,756 5,300 13,380 12,007
Depreciation 572 552 1,140 1,108
Total operating expenses 11,631 12,052 27,331 26,249
         
Income from operations 8,371 13,203 14,532 28,960
         
Other income:        
Interest income, net 459 428 1,026 807
Other, net 304 255 561 572
Total other income 763 683 1,587 1,379
         
Income before provision for income taxes 9,134 13,886 16,119 30,339
         
Provision for income taxes 2,469 3,134 4,111 7,005
         
Net income$6,665$10,752$12,008$23,334
         
Comprehensive income$6,665$10,752$12,008$23,334
         
Net income per common share:        
Basic$0.33$0.53$0.60$1.14
Diluted$0.33$0.52$0.60$1.14
         
Weighted average number of common shares outstanding:        
Basic 19,963 20,463 20,098 20,436
Diluted 19,973 20,520 20,109 20,485
         
Cash dividends declared per common share$0.27$0.27$0.54$0.52
         


PETMED EXPRESS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands) (Unaudited)
 
  Six Months Ended
  September 30,
  2019  2018 
Cash flows from operating activities:      
Net income$12,008 $23,334 
Adjustments to reconcile net income to net cash      
provided by operating activities:      
Depreciation 1,140  1,108 
Share based compensation 1,365  1,500 
Deferred income taxes 274  189 
Bad debt expense 64  49 
(Increase) decrease in operating assets      
and increase (decrease) in liabilities:      
Accounts receivable 1,012  457 
Inventories - finished goods 2,309  (5,279)
Prepaid income taxes 582  170 
Prepaid expenses and other current assets (1,433) (94)
Accounts payable (1,120) (996)
Accrued expenses and other current liabilities 568  (36)
Income taxes payable 525  - 
Net cash provided by operating activities 17,294  20,402 
       
Cash flows from investing activities:      
Purchases of property and equipment (416) (450)
Net cash used in investing activities (416) (450)
       
Cash flows from financing activities:      
Repurchase and retirement of common stock (11,496) - 
Dividends paid (11,014) (10,756)
Net cash used in financing activities (22,510) (10,756)
       
Net (decrease) increase in cash and cash equivalents (5,632) 9,196 
Cash and cash equivalents, at beginning of period 100,529  77,936 
       
Cash and cash equivalents, at end of period$94,897 $87,132 
       
Supplemental disclosure of cash flow information:      
       
Cash paid for income taxes$2,730 $6,645 
       
Dividends payable in accrued expenses$155 $207