PetMed Express D/b/a 1-800-PetMeds Announces Its Second Fiscal Quarter Financial Results

POMPANO BEACH, Fla., Oct. 22, 2012 (GLOBE NEWSWIRE) -- PetMed Express, Inc. (Nasdaq:PETS) today announced its financial results for the quarter ended September 30, 2012. Net income was $4.0 million, or $0.20 diluted per share, for the quarter ended September 30, 2012, compared to net income of $3.9 million, or $0.19 diluted per share, for the quarter ended September 30, 2011, a 6.0% increase to EPS. Net income was $8.0 million, or $0.40 diluted per share, for the six months ended September 30, 2012, compared to net income of $8.8 million, or $0.41 diluted per share, for the six months ended September 30, 2011, a 4.0% decrease to EPS. Net sales for the quarter ended September 30, 2012 were $58.1 million, compared to $58.2 million for the quarter ended September 30, 2011. Net sales for the six months ended September 30, 2012 were $127.1 million, compared to $131.8 million for the six months ended September 30, 2011, a decrease of 3.6%. Online sales increased 2.9% for the quarter ended September 30, 2012, with approximately 77% of all sales being generated via the Internet, compared to 74% for the same period the prior year.

Menderes Akdag, CEO and President, commented: "We were able to stabilize our top line and improve our bottom line results this quarter. Net income growth in the quarter can be attributed to the leveraging of our operating expenses by saving 136 basis points. The advertising costs of acquiring a new customer were reduced to $42 for the quarter ended September 30, 2012, compared to $43 for the same quarter the prior year. Although sales were relatively flat during the quarter ended September 30, 2012, total orders increased by 5.5%, and reorder sales increased by 2.1%. The unavailability of Novartis brands, due to the manufacturer's suspended production, continued to negatively impact our sales. During the quarter we repurchased 397,000 shares of our common stock for $3.9 million, at an average share price of $9.74. Looking to the future, we will continue to focus on advertising efficiency and shifting sales to higher margin items, including generics, while continuing to expand our product offerings."

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. Eastern Time on October 22, 2012 until November 5, 2012 at 11:59 P.M. Eastern Time. To access the replay, call (866) 407-9272 (toll free) or (203) 369-0617, 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, 2012. 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,
  2012 2012
  (Unaudited)  
ASSETS    
     
Current assets:    
 Cash and cash equivalents  $ 47,041  $ 46,801
 Short term investments - available for sale  15,425  10,347
 Accounts receivable, less allowance for doubtful accounts of $6 and $5, respectively  1,888  1,572
 Inventories - finished goods  19,590  26,217
 Prepaid expenses and other current assets  1,047  1,241
 Deferred tax assets  852  1,230
 Prepaid income taxes  349  199
 Total current assets  86,192  87,607
     
 Property and equipment, net  2,311  2,597
 Intangible asset  860  860
     
Total assets  $ 89,363  $ 91,064
     
LIABILITIES AND SHAREHOLDERS' EQUITY    
     
Current liabilities:    
 Accounts payable  $ 6,956  $ 6,619
 Accrued expenses and other current liabilities  2,067  2,772
 Total current liabilities  9,023  9,391
     
Deferred tax liabilities  227  492
     
Total liabilities  9,250  9,883
     
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; 20,007 and 20,338 shares issued and outstanding, respectively  20  20
Retained earnings  80,015  81,108
Accumulated other comprehensive gain  69  44
     
 Total shareholders' equity  80,113  81,181
     
Total liabilities and shareholders' equity  $ 89,363  $ 91,064
         
         
 PETMED EXPRESS, INC. AND SUBSIDIARIES 
 CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME 
 (In thousands, except for per share amounts) (Unaudited) 
         
   Three Months Ended   Six Months Ended 
   September 30,   September 30, 
  2012 2011 2012 2011
         
 Sales   $58,145  $58,225  $127,100  $131,803
 Cost of sales   38,775  38,291  85,426  87,759
         
 Gross profit   19,370  19,934  41,674  44,044
         
 Operating expenses:         
 General and administrative   5,371  5,604  11,293  11,708
 Advertising   7,424  7,904  17,274  18,004
 Depreciation   249  346  577  687
 Total operating expenses   13,044  13,854  29,144  30,399
         
 Income from operations   6,326  6,080  12,530  13,645
         
 Other income:         
 Interest income, net   64  72  123  158
 Other, net   --   64  --   63
 Total other income   64  136  123  221
         
 Income before provision for income taxes   6,390  6,216  12,653  13,866
         
 Provision for income taxes   2,356  2,286  4,667  5,099
         
 Net income   $ 4,034  $ 3,930  $ 7,986  $ 8,767
         
 Net income per common share:         
 Basic   $ 0.20  $ 0.19  $ 0.40  $ 0.41
 Diluted   $ 0.20  $ 0.19  $ 0.40  $ 0.41
         
 Weighted average number of common shares outstanding:         
 Basic   19,962  20,642  20,040  21,142
 Diluted   20,062  20,710  20,154  21,238
         
 Comprehensive income   $ 4,050  $ 3,979  $ 8,011  $ 8,909
         
 Cash dividends declared per common share   $ 0.150  $ 0.125  $ 0.300  $ 0.250
     
     
PETMED EXPRESS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (In thousands) (Unaudited) 
     
   Six Months Ended 
   September 30, 
  2012 2011
 Cash flows from operating activities:     
 Net income   $ 7,986  $ 8,767
 Adjustments to reconcile net income to net cash provided by operating activities:     
 Depreciation   577  687
 Share based compensation   1,039  1,127
 Deferred income taxes   113  114
 Bad debt expense   27  25
 (Increase) decrease in operating assets and increase (decrease) in liabilities:     
 Accounts receivable   (343)  527
 Inventories - finished goods   6,627  6,026
 Prepaid income taxes   (150)  (26)
 Prepaid expenses and other current assets   194  (923)
 Accounts payable   337  86
 Accrued expenses and other current liabilities   (673)  (215)
 Net cash provided by operating activities   15,734  16,195
     
 Cash flows from investing activities:     
 Net change in investments   (5,053)  9,693
 Purchases of property and equipment   (291)  (293)
 Net cash (used in) provided by investing activities   (5,344)  9,400
     
 Cash flows from financing activities:     
 Dividends paid   (6,117)  (5,404)
 Purchases of treasury stock   (3,865)  (22,642)
 Tax adjustment related to restricted stock   (168)  (71)
 Net cash used in financing activities   (10,150)  (28,117)
     
 Net increase (decrease) in cash and cash equivalents   240  (2,522)
 Cash and cash equivalents, at beginning of period   46,801  49,660
     
 Cash and cash equivalents, at end of period   $ 47,041  $ 47,138
     
 Supplemental disclosure of cash flow information:     
     
 Cash paid for income taxes   $ 4,872  $ 5,083
     
 Dividends payable in accrued expenses   $ 136  $ 135
     
CONTACT: For investment relations contact PetMed Express, Inc.         Bruce S. Rosenbloom, CFO, 954-979-5995

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