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PetMed Express D/B/A 1-800-PetMeds Announces its Second Quarter Financial Results

Second Quarter Net Income Increased 23%
Second Quarter Reorder Sales Increased 11%
Second Quarter Diluted EPS $0.52 per share vs $0.43 per share

DELRAY BEACH, Fla., Oct. 22, 2018 (GLOBE NEWSWIRE) -- PetMed Express, Inc. (NASDAQ: PETS) today announced its financial results for the quarter ended September 30, 2018.  Net sales for the quarter ended September 30, 2018 were $71.4 million, compared to $66.7 million for the quarter ended September 30, 2017, an increase of 7.0%.  Net sales for the six months ended September 30, 2018 were $158.8 million, compared to $146.4 million for the six months ended September 30, 2017, an increase of 8.5%.  Net income was $10.8 million, or $0.52 diluted per share, for the quarter ended September 30, 2018, compared to net income of $8.8 million, or $0.43 diluted per share, for the quarter ended September 30, 2017, a 23% increase to net income.  Net income for the six months ended September 30, 2018 was $23.3 million, or $1.14 diluted per share, compared to net income of $18.0 million, or $0.88 diluted per share, for the six months ended September 30, 2017, a 29% increase to net income. Reorder sales increased 11%, to $61.0 million for the quarter ended September 30, 2018, compared to $55.1 million for the same quarter in the prior year.  The Company’s online sales for the quarter ended September 30, 2018 were approximately 85% of all sales compared to 84% for the same quarter the prior year, with online sales increasing 7.4%. 

Menderes Akdag, CEO and President, commented: “We were pleased with our net income and reorder sales growth for the quarter. The increase to net income for the quarter can be attributed to increased revenues, which increased gross profit by approximately $1.8 million.  In addition, our net income growth was boosted by the Tax Reform Act of 2017, due to a decline in our federal tax rate from 35% to 21%.  We expect our effective tax rate in fiscal 2019 to be approximately 24%.  Average order value increased to $87 for the quarter compared to $85 for the same quarter the prior year.  Net cash from operations for the quarter ended September 30, 2018 was $20.4 million, compared to $18.3 million for the same period last year.   For the remainder of fiscal 2019 we will continue to focus on sales growth and improving our service levels.”

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 16, 2018, to shareholders of record at the close of business on November 5, 2018.  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 22, 2018 until November 5, 2018 at 11:59 P.M.  To access the replay, call (886) 457-5505 (toll free) or (203) 369-1279, 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, 2018.  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,
  2018 2018
ASSETS (Unaudited)  
     
Current assets:    
Cash and cash equivalents$87,132$77,936
Accounts receivable, less allowance for doubtful accounts of $37 and $35, respectively 1,786 2,292
Inventories - finished goods 28,616 23,337
Prepaid expenses and other current assets 976 882
Prepaid income taxes 618 788
Total current assets 119,128 105,235
     
Noncurrent assets:    
Property and equipment, net 28,083 28,741
Intangible assets 860 860
Total noncurrent assets 28,943 29,601
     
Total assets$148,071$134,836
     
LIABILITIES AND SHAREHOLDERS' EQUITY    
     
Current liabilities:    
Accounts payable$14,278$15,274
Accrued expenses and other current liabilities 2,767 2,835
Total current liabilities 17,045 18,109
     
Deferred tax liabilities 1,185 996
     
Total liabilities 18,230 19,105
     
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;    
20,674 and 20,601 shares issued and outstanding, respectively 21 21
Additional paid-in capital 10,881 9,381
Retained earnings 118,930 106,320
     
Total shareholders' equity 129,841 115,731
     
Total liabilities and shareholders' equity$148,071$134,836
     


 
 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, 
  2018 2017 2018 2017
         
Sales$71,396$66,711$158,786$146,368
Cost of sales 46,141 43,232 103,577 95,424
         
Gross profit 25,255 23,479 55,209 50,944
         
Operating expenses:        
General and administrative 6,200 6,178 13,134 12,404
Advertising 5,300 4,526 12,007 10,818
Depreciation 552 527 1,108 1,058
Total operating expenses 12,052 11,231 26,249 24,280
         
Income from operations 13,203 12,248 28,960 26,664
         
Other income:        
Interest income, net 428 143 807 226
Other, net 255 249 572 490
Total other income 683 392 1,379 716
         
Income before provision for income taxes 13,886 12,640 30,339 27,380
         
Provision for income taxes 3,134 3,880 7,005 9,344
         
Net income$10,752$8,760$23,334$18,036
         
Comprehensive income$10,752$8,760$23,334$18,036
         
Net income per common share:        
Basic$0.53$0.43$1.14$0.89
Diluted$0.52$0.43$1.14$0.88
         
Weighted average number of common shares outstanding:      
Basic 20,463 20,349 20,436 20,321
Diluted 20,520 20,437 20,485 20,442
         
Cash dividends declared per common share$0.27$0.20$0.52$0.40
         

 

  
PETMED EXPRESS, INC. AND SUBSIDIARIES 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS 
 (In thousands) (Unaudited)  
  
   Six Months Ended  
   September 30,  
  2018  2017  
Cash flows from operating activities:     
Net income$23,334 $18,036  
Adjustments to reconcile net income to net cash     
provided by operating activities:     
Depreciation 1,108  1,058  
Share based compensation 1,500  1,146  
Deferred income taxes 189  216  
Bad debt expense 49  46  
(Increase) decrease in operating assets     
and increase (decrease) in liabilities:     
Accounts receivable 457  (250) 
Inventories - finished goods (5,279) (2,777) 
Prepaid income taxes 170  -  
Prepaid expenses and other current assets (94) (87) 
Accounts payable (996) (4,845) 
Income taxes payable -  5,349  
Accrued expenses and other current liabilities (36) 411  
Net cash provided by operating activities 20,402  18,303  
      
Cash flows from investing activities:     
Purchases of property and equipment (450) (350) 
Net cash used in investing activities (450) (350) 
      
Cash flows from financing activities:     
Dividends paid (10,756) (8,240) 
Net cash used in financing activities (10,756) (8,240) 
      
Net increase in cash and cash equivalents 9,196  9,713  
Cash and cash equivalents, at beginning of period 77,936  58,730  
      
Cash and cash equivalents, at end of period$87,132 $68,443  
      
Supplemental disclosure of cash flow information:     
      
Cash paid for income taxes$6,645 $3,780  
      
Dividends payable in accrued expenses$207 $202  
      
Monday, October 22, 2018 - 08:00