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PetMed Express D/B/A 1-800-Petmeds Announces Record Second Quarter Financial Results

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

Source:PetMed Express, Inc.