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PetMed Express D/B/A 1-800-PetMeds Announces Its Second Quarter Financial Results and Its $0.19 Per Share Quarterly Dividend

Second Quarter Net Income Increased 9%
Second Quarter Sales Increased 7%

POMPANO BEACH, Fla., Oct. 24, 2016 (GLOBE NEWSWIRE) -- PetMed Express, Inc. (NASDAQ:PETS) today announced its financial results for the quarter ended September 30, 2016. Net income was $4.9 million, or $0.24 diluted per share, compared to net income of $4.5 million, or $0.22 diluted per share, for the quarter ended September 30, 2015, an 8.8% increase to net income. Net income for the six months ended September 30, 2016 was $11.5 million, or $0.56 diluted per share, compared to net income of $10.3 million, or $0.51 diluted per share, for the six months ended September 30, 2015, a 12% increase to net income. Net sales for the quarter ended September 30, 2016 were $60.8 million, compared to $56.7 million for the quarter ended September 30, 2015, an increase of 7.2%. Net sales for the six months ended September 30, 2016 were $133.3 million, compared to $128.4 million for the six months ended September 30, 2015, an increase of 3.8%. New order sales increased 6.3% to $10.7 million for the quarter ended September 30, 2016, compared to $10.1 million for the same quarter in the prior year. The Company’s online sales for the quarter ended September 30, 2016 were approximately 82% of all sales, compared to 81% for the same quarter the prior year.

Menderes Akdag, CEO and President, commented: “During the September quarter we saw increases in both our new order and reorder sales, with reorder sales increasing 7.4% to $50.1 million for the quarter ended September 30, 2016 compared to $46.7 million for the same quarter the prior year. Our new customer acquisition costs were reduced to $33 for the quarter ended September 30, 2016, compared to $49 for the same period in the prior year. We also saw continued improvement on our bottom line results for the quarter ended September 30, 2016, due to a reduction in our operating expenses, which decreased by about 384 basis points, attributable to a reduction in advertising spending. Cash flow from operations was $27.8 million for the six month ended September 30, 2016, compared to $14.0 million for the six month ended September 30, 2015, with a majority of the increase due to a reduction in inventory. We are currently preparing to move into our new corporate headquarters and distribution facility, which is expected to occur in our third fiscal quarter.”

The Board of Directors declared a quarterly dividend of $0.19 per share on the Company’s common stock. The dividend will be payable on November 18, 2016, to shareholders of record at the close of business on November 7, 2016. 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 24, 2016 until November 7, 2016 at 11:59 P.M. To access the replay, call (800) 839-2310 (toll free) or (203) 369-3635 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, 2016. 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, except for per share data)
September 30, March 31,
2016
2016
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $51,896 $37,639
Accounts receivable, less allowance for doubtful
accounts of $10 and $13, respectively 1,369 1,724
Inventories - finished goods 14,820 25,586
Prepaid expenses and other current assets 6,486 2,435
Prepaid income taxes 21 243
Total current assets 74,592 67,627
Noncurrent assets:
Property and equipment, net 20,576 20,929
Intangible assets 860 860
Deferred tax assets 499 863
Total noncurrent assets 21,935 22,652
Total assets $96,527 $90,279
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $6,147 $5,004
Accrued expenses and other current liabilities 2,416 2,080
Total liabilities 8,563 7,084
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;
20,527 and 20,447 shares issued and outstanding, respectively 21 20
Additional paid-in capital 5,932 4,871
Retained earnings 82,002 78,295
Total shareholders' equity 87,964 83,195
Total liabilities and shareholders' equity $96,527 $90,279


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,
2016 2015 2016 2015
Sales$ 60,791 $ 56,725 $ 133,278 $ 128,359
Cost of sales 42,727 37,812 92,762 86,480
Gross profit 18,064 18,913 40,516 41,879
Operating expenses:
General and administrative 5,747 5,388 11,845 11,187
Advertising 4,382 6,249 10,142 14,134
Depreciation 204 186 398 377
Total operating expenses 10,333 11,823 22,385 25,698
Income from operations 7,731 7,090 18,131 16,181
Other income:
Interest income, net 32 55 60 105
Other, net 23 (4) 76 (8)
Total other income 55 51 136 97
Income before provision for income taxes 7,786 7,141 18,267 16,278
Provision for income taxes 2,887 2,639 6,774 6,019
Net income$ 4,899 $ 4,502 $ 11,493 $ 10,259
Net change in unrealized gain (loss) on short
term investments - 16 - (19)
Comprehensive income$ 4,899 $ 4,518 $ 11,493 $ 10,240
Net income per common share:
Basic$ 0.24 $ 0.22 $ 0.57 $ 0.51
Diluted$ 0.24 $ 0.22 $ 0.56 $ 0.51
Weighted average number of common shares outstanding:
Basic 20,234 20,126 20,208 20,100
Diluted 20,377 20,246 20,355 20,222
Cash dividends declared per common share$ 0.19 $ 0.18 $ 0.38 $ 0.36


PETMED EXPRESS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands) (Unaudited)
Six Months Ended
September 30,
2016 2015
Cash flows from operating activities:
Net income $ 11,493 $ 10,259
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 398 377
Share based compensation 946 777
Deferred income taxes 364 4
Bad debt expense 352 227
(Increase) decrease in operating assets
and increase (decrease) in liabilities:
Accounts receivable 3 81
Inventories - finished goods 10,765 664
Prepaid income taxes 222 (60)
Prepaid expenses and other current assets 1,764 (86)
Accounts payable 1,143 2,125
Income taxes payable - (50)
Accrued expenses and other current liabilities 335 (277)
Net cash provided by operating activities 27,785 14,041
Cash flows from investing activities:
Net change in investments - (33)
Purchases of property and equipment (5,859) (175)
Net cash used in investing activities (5,859) (208)
Cash flows from financing activities:
Dividends paid (7,784) (7,358)
Excess tax benefits related to restricted stock 115 92
Net cash used in financing activities (7,669) (7,266)
Net increase in cash and cash equivalents 14,257 6,567
Cash and cash equivalents, at beginning of period 37,639 35,613
Cash and cash equivalents, at end of period $ 51,896 $ 42,180
Supplemental disclosure of cash flow information:
Cash paid for income taxes $ 6,186 $ 6,033
Prepaid property and equipment in current assets $ 5,815 $ -
Dividends payable in accrued expenses $ 144 $ 154

Source:PetMed Express, Inc.