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PetMed Express D/B/A 1-800-PetMeds Announces Its Second Quarter Financial Results and Its $0.17 Per Share Quarterly Dividend

POMPANO BEACH, Fla., Oct. 20, 2014 (GLOBE NEWSWIRE) -- PetMed Express, Inc. (Nasdaq:PETS) today announced its financial results for the quarter ended September 30, 2014. Net sales for the quarter ended September 30, 2014 were $57.6 million, compared to $60.5 million for the quarter ended September 30, 2013, a decrease of 4.8%. Net sales for the six months ended September 30, 2014 were $130.1 million, compared to $134.7 million for the quarter ended September 30, 2013, a decrease of 3.4%. Excluding a one-time charge for an IT-related discontinued project, net income was $3.8 million, or $0.19 diluted per share, for the quarter ended September 30, 2014, compared to net income of $4.2 million, or $0.21 diluted per share, for the quarter ended September 30, 2013, and net income was $8.8 million, or $0.44 diluted per share, for the six months ended September 30, 2014, compared to net income of $8.9 million, or $0.44 diluted per share, for the six months ended September 30, 2013. The one-time IT-related discontinued project cost of $1.7 million was expensed in the September quarter. The after tax net impact of this charge was $1.1 million, or $0.05 diluted per share. There was no impact to the Company's cash flow and no further charges are expected in the future related to this discontinued project. The Company's online sales for the quarter ended September 30, 2014 were approximately 80% of all sales, compared to 79% for the same quarter the prior year.

Menderes Akdag, CEO and President, commented: "While navigating through a shortened flea and tick season, we were able to maintain increased gross profit margins and an increased average order size. For the quarter ended September 30, 2014 our gross profit increased 23 basis points, which can be attributed to a shift in sales to higher margin items. Our average order size increased to $75 for the quarter ended September 30, 2014, compared to $73 for the same quarter in the prior year. Cash from operations was $23.6 million for the quarter ended September 30, 2014, compared to $24.4 million for the quarter ended September 30, 2013. For the remainder of Fiscal 2015 we are focusing on improving our marketing efforts to increase sales."

The Board of Directors declared a quarterly dividend of $0.17 per share on the Company's common stock. The dividend will be payable on November 14, 2014, to shareholders of record at the close of business on November 3, 2014. 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 20, 2014 until November 3, 2014 at 11:59 P.M. To access the replay, call (866) 420-4828 (toll free) or (203) 369-0790 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, 2014. 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, March 31,
2014 2014
ASSETS (Unaudited)
Current assets:
Cash and cash equivalents $ 34,579 $ 18,305
Short term investments - available for sale 15,583 15,539
Accounts receivable, less allowance for doubtful accounts of $8 and $7, respectively 1,957 1,761
Inventories - finished goods 20,535 35,727
Prepaid expenses and other current assets 1,924 1,761
Deferred tax assets 716 1,062
Prepaid income taxes 1,870 54
Total current assets 77,164 74,209
Noncurrent assets:
Prepaid expenses -- 1,996
Property and equipment, net 1,361 1,310
Intangible assets 860 860
Deferred tax assets 44 --
Total assets $ 79,429 $ 78,375
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 5,248 $ 5,768
Accrued expenses and other current liabilities 2,334 2,325
Total current liabilities 7,582 8,093
Deferred tax liabilities -- 65
Total liabilities 7,582 8,158
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; 20,268 and 20,190 shares issued and outstanding, respectively 20 20
Additional paid-in capital 2,370 1,578
Retained earnings 69,478 68,647
Accumulated other comprehensive loss (30) (37)
Total shareholders' equity 71,847 70,217
Total liabilities and shareholders' equity $ 79,429 $ 78,375
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,
2014 2013 2014 2013
Sales $ 57,576 $ 60,479 $ 130,117 $ 134,673
Cost of sales 39,117 41,227 87,886 91,408
Gross profit 18,459 19,252 42,231 43,265
Operating expenses:
General and administrative 5,381 5,505 11,256 11,378
Advertising 6,915 6,985 16,811 17,380
Discontinued project costs 1,714 -- 1,714 --
Depreciation 159 230 322 478
Total operating expenses 14,169 12,720 30,103 29,236
Income from operations 4,290 6,532 12,128 14,029
Other income:
Interest income, net 44 48 88 95
Other, net (2) 1 7 (1)
Total other income 42 49 95 94
Income before provision for income taxes 4,332 6,581 12,223 14,123
Provision for income taxes 1,600 2,431 4,518 5,218
Net income $ 2,732 $ 4,150 $ 7,705 $ 8,905
Net change in unrealized gain (loss) on short term investments (1) -- 7 (46)
Comprehensive income $ 2,731 $ 4,150 $ 7,712 $ 8,859
Net income per common share:
Basic $ 0.14 $ 0.21 $ 0.39 $ 0.45
Diluted $ 0.14 $ 0.21 $ 0.38 $ 0.44
Weighted average number of common shares outstanding:
Basic 20,016 19,902 19,988 19,875
Diluted 20,146 20,044 20,119 20,024
Cash dividends declared per common share $ 0.17 $ 0.17 $ 0.34 $ 0.32
PETMED EXPRESS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands) (Unaudited)
Six Months Ended
September 30,
2014 2013
Cash flows from operating activities:
Net income $ 7,705 $ 8,905
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation 322 478
Share based compensation 753 732
Discontinued project costs 1,714 --
Deferred income taxes 237 193
Bad debt expense 40 49
(Increase) decrease in operating assets and increase (decrease) in liabilities:
Accounts receivable (235) 6
Inventories - finished goods 15,192 14,260
Prepaid income taxes (1,816) (779)
Prepaid expenses and other current assets 119 (1,096)
Accounts payable (521) 1,865
Income taxes payable -- (162)
Accrued expenses and other current liabilities 80 (93)
Net cash provided by operating activities 23,590 24,358
Cash flows from investing activities:
Net change in investments (37) (41)
Purchases of property and equipment (372) (31)
Net cash used in investing activities (409) (72)
Cash flows from financing activities:
Dividends paid (6,946) (6,528)
Tax adjustment related to restricted stock 39 --
Net cash used in financing activities (6,907) (6,528)
Net increase in cash and cash equivalents 16,274 17,758
Cash and cash equivalents, at beginning of period 18,305 18,155
Cash and cash equivalents, at end of period $ 34,579 $ 35,913
Supplemental disclosure of cash flow information:
Cash paid for income taxes $ 6,058 $ 5,688
Dividends payable in accrued expenses $ 191 $ 196

Source:PetMed Express, Inc.