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

/EIN News/ -- Gross Margins Improved Sequentially from 28.6% to 29.5%
Net Income Margins Increased 180 Basis Points Sequentially
Average Order Size increased from $84 to $85

DELRAY BEACH, Fla., Jan. 21, 2020 (GLOBE NEWSWIRE) -- PetMed Express, Inc. (NASDAQ: PETS) today announced its financial results for the quarter ended December 31, 2019.  Net sales for the quarter ended December 31, 2019 were $59.9 million, compared to $60.1 million for the quarter ended December 31, 2018.  Net income was $6.8 million, or $0.34 diluted per share, for the quarter ended December 31, 2019, compared to net income of $7.8 million, or $0.38 diluted per share, for the quarter ended December 31, 2018, a 10% decrease in diluted earnings per share.  Average order size increased to $85 for the quarter ended December 31, 2019, compared to $84 for the same quarter in the prior year.  Reorder sales increased 1.0%, to $53.8 million for the quarter ended December 31, 2019, compared to $53.3 million for the same quarter in the prior year. 

Menderes Akdag, CEO and President, commented: “We were encouraged with improvements to our average order size, and gross and net income margins during the quarter. Gross margins improved by 90 basis points from 28.6% in the September quarter to 29.5% in the December quarter. Net income margins improved 180 basis points from 9.6% in the September quarter to 11.4% in the December quarter. The gross margin increase can be attributed to our success in obtaining direct purchasing relationships with all the major manufacturers, and the implementation of the minimum advertised price (MAP) policy by those manufacturers.  We anticipate MAP pricing to stabilize pet medication prices throughout the online channel.  Net cash from operations for the nine months ended December 31, 2019 was $21.6 million.   In 2020, we will focus on optimizing our marketing in this more competitive environment and being more efficient with our advertising spending.  In addition, we will continue 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 84.0%.  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 February 14, 2020, to shareholders of record at the close of business on February 3, 2020.  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 21, 2020 until February 4, 2020 at 11:59 P.M Eastern Time.  To access the replay, call (800) 964-3380 (toll free) or (402) 998-0979, 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)
             
    December 31,
  March 31,
    2019
  2019
ASSETS   (Unaudited)
     
             
Current assets:            
Cash and cash equivalents $ 92,374   $ 100,529  
Accounts receivable, less allowance for doubtful            
accounts of $31 and $39, respectively   2,052     2,542  
Inventories - finished goods   24,165     21,370  
Prepaid expenses and other current assets   4,176     1,408  
Prepaid income taxes   -     582  
Total current assets   122,767     126,431  
             
Noncurrent assets:            
Property and equipment, net   25,917     27,136  
Intangible assets   860     860  
Total noncurrent assets   26,777     27,996  
             
Total assets $ 149,544   $ 154,427  
             
LIABILITIES AND SHAREHOLDERS' EQUITY            
             
Current liabilities:            
Accounts payable $ 16,635   $ 16,275  
Accrued expenses and other current liabilities   3,195     2,351  
Income taxes payable   895     -  
Total current liabilities   20,725     18,626  
             
Deferred tax liabilities   1,109     1,121  
             
Total liabilities   21,834     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;            
20,166 and 20,674 shares issued and outstanding, respectively   20     21  
Additional paid-in capital   3,063     12,478  
Retained earnings   124,618     122,172  
             
Total shareholders' equity   127,710     134,680  
             
Total liabilities and shareholders' equity $ 149,544   $ 154,427  
             


 
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,
    2019
  2018
  2019
  2018
                         
Sales $ 59,915   $ 60,068   $ 209,839   $ 218,854  
Cost of sales   42,218     40,687     150,279     144,264  
                         
Gross profit   17,697     19,381     59,560     74,590  
                         
Operating expenses:                        
General and administrative   6,040     5,793     18,851     18,927  
Advertising   3,163     3,619     16,543     15,626  
Depreciation   562     556     1,702     1,664  
Total operating expenses   9,765     9,968     37,096     36,217  
                         
Income from operations   7,932     9,413     22,464     38,373  
                         
Other income:                        
Interest income, net   421     508     1,447     1,315  
Other, net   301     255     862     827  
Total other income   722     763     2,309     2,142  
                         
Income before provision for income taxes   8,654     10,176     24,773     40,515  
                         
Provision for income taxes   1,814     2,389     5,925     9,394  
                         
Net income $ 6,840   $ 7,787   $ 18,848   $ 31,121  
                         
Comprehensive income $ 6,840   $ 7,787   $ 18,848   $ 31,121  
                         
Net income per common share:                        
Basic $ 0.34   $ 0.38   $ 0.94   $ 1.52  
Diluted $ 0.34   $ 0.38   $ 0.94   $ 1.52  
                         
Weighted average number of common shares outstanding:
Basic   19,984     20,483     20,060     20,452  
Diluted   19,994     20,493     20,071     20,487  
                         
Cash dividends declared per common share $ 0.27   $ 0.27   $ 0.81   $ 0.79  
                         


 
PETMED EXPRESS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands) (Unaudited)
 
    Nine Months Ended
    December 31,
    2019   2018
Cash flows from operating activities:        
Net income $ 18,848   $ 31,121  
Adjustments to reconcile net income to net cash        
provided by operating activities:        
Depreciation   1,702     1,664  
Share based compensation   2,081     2,312  
Deferred income taxes   (12 )   11  
Bad debt expense   102     49  
(Increase) decrease in operating assets        
and increase (decrease) in liabilities:        
Accounts receivable   388     974  
Inventories - finished goods   (2,795 )   (8,910 )
Prepaid income taxes   582     263  
Prepaid expenses and other current assets   (1,424 )   (384 )
Accounts payable   360     5,009  
Accrued expenses and other current liabilities   851     (84 )
Income taxes payable   895     -  
Net cash provided by operating activities   21,578     32,025  
         
Cash flows from investing activities:        
Purchases of property and equipment   (1,827 )   (507 )
Net cash used in investing activities   (1,827 )   (507 )
         
Cash flows from financing activities:        
Repurchase and retirement of common stock   (11,496 )   -  
Dividends paid   (16,410 )   (16,288 )
Net cash used in financing activities   (27,906 )   (16,288 )
         
Net (decrease) increase in cash and cash equivalents   (8,155 )   15,230  
Cash and cash equivalents, at beginning of period   100,529     77,936  
         
Cash and cash equivalents, at end of period $ 92,374   $ 93,166  
         
Supplemental disclosure of cash flow information:        
         
Cash paid for income taxes $ 4,460   $ 9,120  
         
Property and equipment in current assets $ 1,344   $ -  
         
Dividends payable in accrued expenses $ 196   $ 258  
         

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