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

POMPANO BEACH, Fla., Oct. 21, 2013 (GLOBE NEWSWIRE) -- PetMed Express, Inc. (Nasdaq:PETS) today announced its financial results for the quarter ended September 30, 2013. Net sales for the quarter ended September 30, 2013 were $60.5 million, compared to $58.1 million for the quarter ended September 30, 2012, an increase of 4.0%. Net sales for the six months ended September 30, 2013 were $134.7 million, compared to $127.1 million for the quarter ended September 30, 2012, an increase of 6.0%. Net income was $4.2 million, or $0.21 diluted per share, for the quarter ended September 30, 2013, compared to net income of $4.0 million, or $0.20 diluted per share, for the quarter ended September 30, 2012, a 3.0% increase to EPS. Net income was $8.9 million, or $0.44 diluted per share, for the six months ended September 30, 2013, compared to net income of $8.0 million, or $0.40 diluted per share, for the six months ended September 30, 2012, a 12.2% increase to EPS. Reorder sales increased by 5.3%, from $46.4 million to $48.9 million for the quarters ended September 30, 2012 and 2013, respectively. Additionally, the Company's online sales increased by 7.3% to $47.9 million for the quarter ended September 30, 2013, compared to $44.6 million for the same quarter the prior year, with approximately 79% of all orders being generated from its website during the quarter compared to 77% for the same quarter the prior year.

Menderes Akdag, CEO and President, commented: "We are pleased with the strong reorder sales for the quarter. Our sales increase for the quarter was also highlighted by an increased average order size - $73 for the quarter ended September 30, 2013 compared to $72 for the same quarter in the prior year. For the quarter ended September 30, 2013 our operating expenses decreased by 140 basis points, mainly due to a reduction in advertising expenses. Cash flow from operations increased by 55%, from $15.7 million to $24.4 million for the quarters ended September 30, 2012 and 2013, respectively. For the remainder of Fiscal 2014 we are focusing on improving our gross profit margins and 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. on October 21, 2013 until November 4, 2013 at 11:59 P.M. To access the replay, call (800) 454-0163 (toll free) or (203) 369-3803, 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, 2013. 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, 954-979-5995.
PETMED EXPRESS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
     
  September 30, 2013 March 31, 2013
  (Unaudited)  
ASSETS    
     
Current assets:    
Cash and cash equivalents  $ 35,913  $ 18,155
Short term investments - available for sale  15,486  15,490
Accounts receivable, less allowance for doubtful accounts of $5 and $5, respectively  1,384  1,439
Inventories - finished goods  17,341  31,601
Prepaid expenses and other current assets  3,616  2,520
Deferred tax assets  771  982
Prepaid income taxes  779  -- 
Total current assets  75,290  70,187
     
Property and equipment, net  1,685  2,132
Intangible asset  860  860
     
Total assets  $ 77,835  $ 73,179
     
LIABILITIES AND SHAREHOLDERS' EQUITY    
     
Current liabilities:    
Accounts payable  $ 8,319  $ 6,454
Accrued expenses and other current liabilities  2,208  2,381
Income taxes payable  --   162
Total current liabilities  10,527  8,997
     
Deferred tax liabilities  150  168
     
Total liabilities  10,677  9,165
     
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; 20,190 and 20,109 shares issued and outstanding, respectively  20  20
Additional paid-in capital  732  -- 
Retained earnings  66,445  63,987
Accumulated other comprehensive loss  (48)  (2)
     
Total shareholders' equity  67,158  64,014
     
Total liabilities and shareholders' equity  $ 77,835  $ 73,179
 
PETMED EXPRESS, INC. AND SUBSIDIARIES 
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME 
(In thousands, except for per share amounts) (Unaudited) 
         
   Three Months Ended September 30,   Six Months Ended September 30, 
  2013 2012 2013 2012
         
Sales   $ 60,479  $ 58,145  $ 134,673  $ 127,100
Cost of sales   41,227  38,775  91,408  85,426
         
Gross profit   19,252  19,370  43,265  41,674
         
Operating expenses:         
General and administrative   5,505  5,371  11,378  11,293
Advertising   6,985  7,424  17,380  17,274
Depreciation   230  249  478  577
Total operating expenses   12,720  13,044  29,236  29,144
         
Income from operations   6,532  6,326  14,029  12,530
         
Other income:         
Interest income, net   48  64  95  123
Other, net   1  --   (1)  -- 
Total other income   49  64  94  123
         
Income before provision for income taxes   6,581  6,390  14,123  12,653
         
Provision for income taxes   2,431  2,356  5,218  4,667
         
Net income   $ 4,150  $ 4,034  $ 8,905  $ 7,986
         
Net change in unrealized gain (loss) on short term investments   --   16  (46)  25
         
Comprehensive income   $ 4,150  $ 4,050  $ 8,859  $ 8,011
         
Net income per common share:         
Basic   $ 0.21  $ 0.20  $ 0.45  $ 0.40
Diluted   $ 0.21  $ 0.20  $ 0.44  $ 0.40
         
Weighted average number of common shares outstanding:       
Basic   19,902  19,962  19,875  20,040
Diluted   20,044  20,062  20,024  20,154
         
Cash dividends declared per common share   $ 0.17  $ 0.15  $ 0.32  $ 0.30
 
PETMED EXPRESS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (In thousands) (Unaudited) 
 
   Six Months Ended September 30, 
  2013 2012
Cash flows from operating activities:     
Net income   $ 8,905  $ 7,986
Adjustments to reconcile net income to net cash provided by operating activities:     
Depreciation   478  577
Share based compensation   732  1,039
Deferred income taxes   193  113
Bad debt expense   49  27
(Increase) decrease in operating assets and increase (decrease) in liabilities: 
Accounts receivable   6  (343)
Inventories - finished goods   14,260  6,627
Prepaid income taxes   (779)  (150)
Prepaid expenses and other current assets   (1,096)  194
Accounts payable   1,865  337
Income taxes payable   (162)  -- 
Accrued expenses and other current liabilities   (93)  (673)
Net cash provided by operating activities   24,358  15,734
     
Cash flows from investing activities:     
Net change in investments   (41)  (5,053)
Purchases of property and equipment   (31)  (291)
Net cash used in investing activities   (72)  (5,344)
     
Cash flows from financing activities:     
Dividends paid   (6,528)  (6,117)
Purchases of treasury stock   --   (3,865)
Tax adjustment related to restricted stock   --   (168)
Net cash used in financing activities   (6,528)  (10,150)
     
Net increase in cash and cash equivalents   17,758  240
Cash and cash equivalents, at beginning of period   18,155  46,801
     
Cash and cash equivalents, at end of period   $ 35,913  $ 47,041
     
Supplemental disclosure of cash flow information:     
     
Cash paid for income taxes   $ 5,688  $ 4,872
     
Dividends payable in accrued expenses   $ 196  $ 136
CONTACT: PetMed Express, Inc.         Bruce S. Rosenbloom, CFO         954-979-5995

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