Second Quarter Net Income Increased 79% Second Quarter Sales Increased 10% Second Quarter Online Sales Increased 12%

DELRAY BEACH, Fla., Oct. 23, 2017 (GLOBE NEWSWIRE) -- PetMed Express, Inc. (NASDAQ:PETS) today announced its financial results for the quarter ended September 30, 2017.  Net income was $8.8 million, or $0.43 diluted per share, for the quarter ended September 30, 2017, compared to net income of $4.9 million, or $0.24 diluted per share, for the quarter ended September 30, 2016, a 79% increase to net income.  Net income for the six months ended September 30, 2017 was $18.0 million, or $0.88 diluted per share, compared to net income of $11.5 million, or $0.56 diluted per share, for the six months ended September 30, 2016, a 57% increase to net income. Net sales for the quarter ended September 30, 2017 were $66.7 million, compared to $60.8 million for the quarter ended September 30, 2016, an increase of 10%.  Net sales for the six months ended September 30, 2017 were $146.4 million, compared to $133.3 million for the six months ended September 30, 2016, an increase of 10%. New order sales increased 9%, to $11.6 million for the quarter ended September 30, 2017, compared to $10.7 million for the same quarter in the prior year.  The Company's online sales for the quarter ended September 30, 2017 were approximately 84% of all sales compared to 82% for the same quarter the prior year, with online sales increasing 12%. 

Menderes Akdag, CEO and President, commented: "The trend we have seen in the last two quarters continued with increases in both new order and reorder sales during the quarter, along with an accelerated increase to net income for the third consecutive quarter.  This increase to net income can be attributed to increased revenue with a shift in sales to higher margin items in the flea, tick and heartworm categories.  Gross profit as a percentage of sales increased to 35.2% for the quarter ended September 30, 2017, compared to 29.7% for the quarter ended September 30, 2016.  Also, an income tax benefit of approximately $807,000 related to stock-based compensation was recognized in the quarter ended September 30, 2017.   Average order value increased to $85 for the quarter compared to $82 for the same quarter the prior year.  For the remainder of fiscal 2018 we will continue to focus on increasing sales and improving our service levels."

The Board of Directors declared a quarterly dividend of $0.20 per share on the Company's common stock.  The dividend will be payable on November 17, 2017, to shareholders of record at the close of business on November 6, 2017.  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 23, 2017 until November 6, 2017 at 10:59 P.M.  To access the replay, call (800) 839-2239 (toll free) or (203) 369-3108, 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, 2017.  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,
    2017   2017
ASSETS   (Unaudited)    
         
Current assets:        
Cash and cash equivalents $ 68,443 $ 58,730
Accounts receivable, less allowance for doubtful        
accounts of $31 and $27, respectively   2,012   1,808
Inventories - finished goods   23,005   20,228
Prepaid expenses and other current assets   1,106   1,019
Total current assets   94,566   81,785
         
Noncurrent assets:        
Property and equipment, net   29,456   30,164
Intangible assets   860   860
Total noncurrent assets   30,316   31,024
         
Total assets $ 124,882 $ 112,809
         
LIABILITIES AND SHAREHOLDERS' EQUITY        
         
Current liabilities:        
Accounts payable $ 10,376 $ 15,221
Accrued expenses and other current liabilities   2,871   2,475
Income taxes payable   6,008   659
Total current liabilities   19,255   18,355
         
Deferred tax liabilities   1,304   1,088
         
Total liabilities   20,559   19,443
         
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;        
20,604 and 20,526 shares issued and outstanding, respectively   21   21
Additional paid-in capital   7,952   6,806
Retained earnings   96,341   86,530
         
Total shareholders' equity   104,323   93,366
         
Total liabilities and shareholders' equity $ 124,882 $ 112,809
         

 
  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,  
    2017   2016   2017   2016
                 
Sales $ 66,711 $ 60,791 $ 146,368 $ 133,278
Cost of sales   43,232   42,727   95,424   92,762
                 
Gross profit   23,479   18,064   50,944   40,516
                 
Operating expenses:                
General and administrative   6,178   5,747   12,404   11,845
Advertising   4,526   4,382   10,818   10,142
Depreciation   527   204   1,058   398
Total operating expenses   11,231   10,333   24,280   22,385
                 
Income from operations   12,248   7,731   26,664   18,131
                 
Other income:                
Interest income, net   143   32   226   60
Other, net   249   23   490   76
Total other income   392   55   716   136
                 
Income before provision for income taxes   12,640   7,786   27,380   18,267
                 
Provision for income taxes   3,880   2,887   9,344   6,774
                 
Net income $ 8,760 $ 4,899 $ 18,036 $ 11,493
                 
Comprehensive income $ 8,760 $ 4,899 $ 18,036 $ 11,493
                 
Net income per common share:                
Basic $ 0.43 $ 0.24 $ 0.89 $ 0.57
Diluted $ 0.43 $ 0.24 $ 0.88 $ 0.56
                 
Weighted average number of common shares outstanding:            
Basic   20,349   20,234   20,321   20,208
Diluted   20,437   20,377   20,442   20,355
                 
Cash dividends declared per common share $ 0.20 $ 0.19 $ 0.40 $ 0.38
                 

 
PETMED EXPRESS, INC. AND SUBSIDIARIES  
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS  
  (In thousands) (Unaudited)    
   
      Six Months Ended    
      September 30,    
    2017   2016  
Cash flows from operating activities:          
Net income $ 18,036   $ 11,493    
Adjustments to reconcile net income to net cash          
provided by operating activities:          
Depreciation   1,058     398    
Share based compensation   1,146     946    
Deferred income taxes   216     364    
Bad debt expense   46     352    
(Increase) decrease in operating assets          
and increase (decrease) in liabilities:          
Accounts receivable   (250 )   3    
Inventories - finished goods   (2,777 )   10,765    
Prepaid income taxes   -     222    
Prepaid expenses and other current assets   (87 )   1,764    
Accounts payable   (4,845 )   1,143    
Income taxes payable   5,349     -    
Accrued expenses and other current liabilities   411     335    
Net cash provided by operating activities   18,303     27,785    
           
Cash flows from investing activities:          
Purchases of property and equipment   (350 )   (5,859 )  
Net cash used in investing activities   (350 )   (5,859 )  
           
Cash flows from financing activities:          
Dividends paid   (8,240 )   (7,784 )  
Excess tax benefits related to restricted stock   -     115    
Net cash used in financing activities   (8,240 )   (7,669 )  
           
Net increase in cash and cash equivalents   9,713     14,257    
Cash and cash equivalents, at beginning of period   58,730     37,639    
           
Cash and cash equivalents, at end of period $ 68,443   $ 51,896    
           
Supplemental disclosure of cash flow information:          
           
Cash paid for income taxes $ 3,780   $ 6,186    
           
Prepaid property and equipment in current assets $ -   $ 5,815    
           
Dividends payable in accrued expenses $ 202   $ 144