Third Quarter New Order Sales Increased 15.5% Third Quarter Net Income Increased 88% Third Quarter Sales Increased 13.7%

DELRAY BEACH, Fla., Jan. 22, 2018 (GLOBE NEWSWIRE) -- PetMed Express, Inc. (NASDAQ:PETS) today announced its financial results for the quarter ended December 31, 2017.  Net sales for the quarter ended December 31, 2017 were $60.1 million, compared to $52.9 million for the quarter ended December 31, 2016, an increase of 13.7%.  Net sales for the nine months ended December 31, 2017 were $206.5 million, compared to $186.1 million for the nine months ended December 31, 2016, an increase of 10.9%.  The increase in sales for the quarter ended December 31, 2017 can be attributed to increased new order sales, which increased 15.5%, and reorder sales, which increased 13.4%.  Net income for the quarter ended December 31, 2017 was $9.1 million, or $0.44 diluted per share, compared to net income of $4.8 million, or $0.24 diluted per share, for the quarter ended December 31, 2016, an 88% increase to net income.  Net income for the nine months ended December 31, 2017 was $27.1 million, or $1.33 diluted per share, compared to net income of $16.3 million, or $0.80 diluted per share, for the nine months ended December 31, 2016, a 66% increase to net income.    Average order size increased to $86 for the quarter ended December 31, 2017, compared to $81 for the same quarter in the prior year. For the quarter ended December 31, 2017, online sales increased 15.0% to $50.4 million from $43.8 million for the same period the prior year, and were approximately 84% of all sales, compared to 83% for the same quarter the prior year. 

Menderes Akdag, CEO and President, commented: "We are very pleased with our third quarter results, achieving double digit increases in both new order and reorder sales, along with an accelerated increase to operating income for the fourth consecutive quarter.  This increase to operating income can be attributed to increased revenue with a shift in sales to new generation medications with higher margins.  Gross profit as a percentage of sales increased to 36.5% for the quarter ended December 31, 2017 compared to 31.5% for the quarter ended December 31, 2016.  In addition, our net income growth was also boosted by the Tax Reform Act of 2017, where we saw a decline in our federal tax rate from 35% to a fiscal year 2018 blended rate of 31.5%.  This blended rate was applied to the nine months ended December 31, 2017, resulting in a tax benefit of approximately $1.7 million, which also included a reduction in our deferred tax liabilities.  We expect a further reduction to our effective tax rate in fiscal 2019, to approximately 24%. Net cash from operations for the nine months ended December 31, 2017 was $35.1 million, compared to $31.6 million for the same period last year."

The Board of Directors declared and increased the quarterly dividend by 25% from $0.20 to $0.25 per share on the Company's common stock.  The dividend will be payable on February 16, 2018, to shareholders of record at the close of business on February 5, 2018.  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 22, 2018 until February 5, 2018 at 11:59 P.M.  To access the replay, call (866) 423-4837 (toll free) or (203) 369-0849 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, except for per share data)
         
    December 31,   March 31,
    2017   2017
    (Unaudited)    
ASSETS        
         
Current assets:        
  Cash and cash equivalents $   80,997 $   58,730
  Accounts receivable, less allowance for doubtful        
  accounts of $26 and $27, respectively     1,715     1,808
  Inventories - finished goods     21,907     20,228
  Prepaid expenses and other current assets     974     1,019
  Total current assets     105,593     81,785
         
Noncurrent assets:        
  Property and equipment, net     29,138     30,164
  Intangible assets     860     860
  Total noncurrent assets     29,998     31,024
         
Total assets $   135,591 $   112,809
         
LIABILITIES AND SHAREHOLDERS' EQUITY        
         
Current liabilities:        
  Accounts payable $   12,426 $   15,221
  Income taxes payable     9,474     659
  Accrued expenses and other current liabilities     3,034     2,475
  Total current liabilities     24,934     18,355
         
  Deferred tax liabilities     676     1,088
         
Total liabilities     25,610     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;        
  20,601 and 20,526 shares issued and outstanding, respectively     21     21
  Additional paid-in capital     8,664     6,806
  Retained earnings     101,287     86,530
         
  Total shareholders' equity     109,981     93,366
         
Total liabilities and shareholders' equity $   135,591 $   112,809
         

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,
    2017   2016   2017   2016
                 
 Sales  $   60,110  $   52,866  $   206,478  $   186,144
 Cost of sales     38,166     36,223     133,590     128,985
                 
 Gross profit     21,944     16,643     72,888      57,159
                 
 Operating expenses:                
  General and administrative     5,818     5,361     18,222     17,206
  Advertising     4,126     3,170     14,944     13,312
  Depreciation     532     457     1,590     855
 Total operating expenses     10,476     8,988     34,756     31,373
                 
 Income from operations     11,468      7,655     38,132     25,786
                 
 Other income:                
  Interest income, net     191     36     417     96
  Other, net     265     130      755     206
 Total other income     456     166     1,172     302
                 
 Income before provision for income taxes   11,924     7,821     39,304     26,088
                 
 Provision for income taxes     2,860     2,998     12,204     9,772
                 
 Net income  $   9,064  $   4,823  $   27,100  $   16,316
                 
 Comprehensive income  $   9,064  $   4,823  $   27,100  $   16,316
                 
 Net income per common share:                
  Basic  $   0.45  $   0.24  $   1.33  $   0.81
  Diluted  $   0.44  $   0.24  $   1.33  $   0.80
                 
 Weighted average number of common shares outstanding:        
  Basic     20,368     20,253     20,337     20,223
  Diluted     20,425     20,408     20,437     20,373
                 
 Cash dividends declared per common share  $   0.20  $   0.19  $   0.60  $   0.57
                 

PETMED EXPRESS, INC. AND SUBSIDIARIES    
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands) (Unaudited)    
         
     Nine Months Ended
     December 31,
    2017     2016  
 Cash flows from operating activities:        
  Net income  $   27,100    $   16,316  
  Adjustments to reconcile net income to net cash    
  provided by operating activities:        
  Depreciation     1,590       855  
  Share based compensation     1,858       1,444  
  Deferred income taxes     (412 )     1,164  
  Bad debt expense     72       368  
  (Increase) decrease in operating assets        
  and increase (decrease) in liabilities:        
  Accounts receivable     21       (188 )
  Inventories - finished goods     (1,679 )     10,661  
  Prepaid income taxes     -        (632 )
  Prepaid expenses and other current assets   45       857  
  Accounts payable     (2,795 )     387  
  Income taxes payable     8,815       -   
  Accrued expenses and other current liabilities   530       410  
 Net cash provided by operating activities     35,145       31,642  
         
 Cash flows from investing activities:        
  Purchases of property and equipment     (564 )     (9,860 )
 Net cash used in investing activities     (564 )     (9,860 )
         
 Cash flows from financing activities:        
  Dividends paid     (12,314 )     (11,632 )
  Excess tax benefits related to restricted stock   -        115  
 Net cash used in financing activities     (12,314 )     (11,517 )
         
 Net increase in cash and cash equivalents     22,267       10,265  
 Cash and cash equivalents, at beginning of period   58,730       37,639  
         
 Cash and cash equivalents, at end of period  $   80,997    $   47,904  
         
 Supplemental disclosure of cash flow information:      
         
  Cash paid for income taxes  $   3,801    $   9,246  
         
  Prepaid property and equipment in current assets  $   -     $   863  
         
  Dividends payable in accrued expenses  $   246    $   196