$PETS – PetMed Express D/B/A 1-800-PetMeds Announces Its Second Quarter Financial Results and Its $0.18 Per Share Quarterly Dividend

POMPANO BEACH, Fla., Oct. 19, 2015 (GLOBE NEWSWIRE) — PetMed Express, Inc. (NASDAQ:PETS) today announced its financial results for the quarter ended September 30, 2015. Excluding a one-time charge for an IT-related discontinued project in the quarter and six months ended September 30, 2014, net income for the quarter ended September 30, 2015 was $4.5 million, or $0.22 diluted per share, compared to net income of $3.8 million, or $0.19 diluted per share, for the quarter ended September 30, 2014, an 18% increase to net income, and net income for the six months ended September 30, 2015 was $10.3 million, or $0.51 diluted per share, compared to net income of $8.8 million, or $0.44 diluted per share, for the six months ended September 30, 2014, a 17% increase to net income. This one-time IT-related discontinued project cost of $1.7 million was expensed in the quarter ended September 30, 2014. The after tax net impact of this charge was $1.1 million, or $0.05 diluted per share. Net sales for the quarter ended September 30, 2015 were $56.7 million, compared to $57.6 million for the quarter ended September 30, 2014, a decrease of 1.5%. Net sales for the six months ended September 30, 2015 were $128.4 million, compared to $130.1 million for the six months ended September 30, 2014, a decrease of 1.4%. The Company’s online sales for the quarter ended September 30, 2015 were approximately 81% of all sales, compared to 80% for the same quarter the prior year.

Menderes Akdag, CEO and President, commented: “Despite sales being down slightly we were able to increase both gross profit margins and average order size during the quarter. For the quarter ended September 30, 2015 our gross profit increased 128 basis points, which can be attributed to a shift in sales to higher margin items. Our average order size increased to $80 for the quarter ended September 30, 2015, compared to $75 for the same quarter in the prior year. Excluding the one-time charge in the quarter ended September 30, 2014, for the quarter ended September 30, 2015 our operating expenses decreased by about 79 basis points, which can be attributed to a reduction in advertising spending. For the remainder of Fiscal 2016 we are focusing on improving our marketing efforts to increase sales and profitability.”

The Board of Directors declared a quarterly dividend of $0.18 per share on the Company’s common stock. The dividend will be payable on November 13, 2015, to shareholders of record at the close of business on November 2, 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 October 19, 2015 until November 3, 2015 at 11:59 P.M. To access the replay, call (800) 688-2794 (toll free) or (203) 369-3685 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, 2015. 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.

PETMED EXPRESS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
         
    September 30,   March 31,
      2015       2015  
    (Unaudited)    
ASSETS        
         
Current assets:        
Cash and cash equivalents $   42,180   $   35,613  
Short term investments – available for sale     15,604       15,591  
Accounts receivable, less allowance for doubtful accounts of $12 and $8, respectively     1,624       1,931  
Inventories – finished goods     24,404       25,068  
Prepaid expenses and other current assets     1,466       1,380  
Deferred tax assets     761       817  
Prepaid income taxes     60        
Total current assets     86,099       80,400  
         
Noncurrent assets:        
Property and equipment, net     1,367       1,569  
Intangible assets     860       860  
Deferred tax assets     74       23  
         
Total assets $   88,400   $   82,852  
         
LIABILITIES AND SHAREHOLDERS’ EQUITY        
         
Current liabilities:        
Accounts payable $   7,277   $   5,153  
Accrued expenses and other current liabilities     1,879       2,214  
Income taxes payable           50  
         
Total liabilities     9,156       7,417  
         
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; 20,331 and 20,262 shares issued and outstanding, respectively     20       20  
Additional paid-in capital     3,987       3,117  
Retained earnings     75,301       72,343  
Accumulated other comprehensive loss     (73 )     (54 )
         
Total shareholders’ equity     79,244       75,435  
         
Total liabilities and shareholders’ equity $   88,400   $   82,852  

 

 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, 
      2015       2014       2015     2014
                 
Sales  $     56,725    $     57,576    $     128,359    $   130,117
Cost of sales        37,812         39,117         86,480       87,886
                 
Gross profit        18,913         18,459         41,879       42,231
                 
Operating expenses:                 
General and administrative        5,388         5,381         11,187       11,256
Advertising        6,249         6,915         14,134       16,811
Discontinued project costs        –          1,714         –        1,714
Depreciation        186         159         377       322
Total operating expenses        11,823         14,169         25,698       30,103
                 
Income from operations        7,090         4,290         16,181       12,128
                 
Other income:                 
Interest income, net        55         44         105       88
Other, net        (4 )       (2 )       (8 )     7
Total other income        51         42         97       95
                 
Income before provision for income taxes        7,141         4,332         16,278       12,223
                 
Provision for income taxes        2,639         1,600         6,019       4,518
                 
Net income  $     4,502    $     2,732    $     10,259    $   7,705
                 
Net change in unrealized gain (loss) on short  term investments        16         (1 )       (19 )     7
                 
Comprehensive income  $     4,518    $     2,731    $     10,240    $   7,712
                 
Net income per common share:                 
Basic  $     0.22    $     0.14    $     0.51    $   0.39
Diluted  $     0.22    $     0.14    $     0.51    $   0.38
                 
Weighted average number of common shares outstanding:             
Basic        20,126         20,016         20,100       19,988
Diluted        20,246         20,146         20,222       20,119
                 
Cash dividends declared per common share   $     0.18    $     0.17    $     0.36    $   0.34

 

PETMED EXPRESS, INC. AND SUBSIDIARIES  
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS  
 (In thousands) (Unaudited)   
   
     Six Months Ended   
     September 30,   
      2015       2014    
Cash flows from operating activities:           
Net income   $     10,259    $     7,705    
Adjustments to reconcile net income to net cash provided by operating activities:           
Depreciation        377         322    
Share based compensation        777         753    
Discontinued project costs        –          1,714    
Deferred income taxes        4         237    
Bad debt expense        227         40    
(Increase) decrease in operating assets and increase (decrease) in liabilities:           
Accounts receivable        81         (235 )  
Inventories – finished goods        664         15,192    
Prepaid income taxes        (60 )       (1,816 )  
Prepaid expenses and other current assets        (86 )       119    
Accounts payable        2,125         (521 )  
Income taxes payable        (50 )       –     
Accrued expenses and other current liabilities        (277 )       80    
Net cash provided by operating activities        14,041         23,590    
           
Cash flows from investing activities:           
Net change in investments        (33 )       (37 )  
Purchases of property and equipment        (175 )       (372 )  
Net cash used in investing activities        (208 )       (409 )  
           
Cash flows from financing activities:           
Dividends paid        (7,358 )       (6,946 )  
Tax adjustment related to restricted stock        92         39    
Net cash used in financing activities        (7,266 )       (6,907 )  
           
Net increase in cash and cash equivalents        6,567         16,274    
Cash and cash equivalents, at beginning of period        35,613         18,305    
           
Cash and cash equivalents, at end of period   $     42,180    $     34,579    
           
Supplemental disclosure of cash flow information:           
           
Cash paid for income taxes   $     6,033    $     6,058    
           
Dividends payable in accrued expenses   $     154    $     191    

 

 

CONTACT: For investment relations contact PetMed Express, Inc., Bruce S. Rosenbloom, CFO, 954-979-5995.