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

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

/EIN News/ -- 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