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

Tuesday, 21. January 2020 14:00

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

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 
     

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