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PetMed Express d/b/a 1-800-PetMeds Announces Its Second Fiscal Quarter Financial Results

POMPANO BEACH, Fla., Oct. 22, 2012 (GLOBE NEWSWIRE) -- PetMed Express, Inc. (Nasdaq:PETS) today announced its financial results for the quarter ended September 30, 2012. Net income was $4.0 million, or $0.20 diluted per share, for the quarter ended September 30, 2012, compared to net income of $3.9 million, or $0.19 diluted per share, for the quarter ended September 30, 2011, a 6.0% increase to EPS. Net income was $8.0 million, or $0.40 diluted per share, for the six months ended September 30, 2012, compared to net income of $8.8 million, or $0.41 diluted per share, for the six months ended September 30, 2011, a 4.0% decrease to EPS. Net sales for the quarter ended September 30, 2012 were $58.1 million, compared to $58.2 million for the quarter ended September 30, 2011. Net sales for the six months ended September 30, 2012 were $127.1 million, compared to $131.8 million for the six months ended September 30, 2011, a decrease of 3.6%. Online sales increased 2.9% for the quarter ended September 30, 2012, with approximately 77% of all sales being generated via the Internet, compared to 74% for the same period the prior year.

Menderes Akdag, CEO and President, commented: "We were able to stabilize our top line and improve our bottom line results this quarter. Net income growth in the quarter can be attributed to the leveraging of our operating expenses by saving 136 basis points. The advertising costs of acquiring a new customer were reduced to $42 for the quarter ended September 30, 2012, compared to $43 for the same quarter the prior year. Although sales were relatively flat during the quarter ended September 30, 2012, total orders increased by 5.5%, and reorder sales increased by 2.1%. The unavailability of Novartis brands, due to the manufacturer's suspended production, continued to negatively impact our sales. During the quarter we repurchased 397,000 shares of our common stock for $3.9 million, at an average share price of $9.74. Looking to the future, we will continue to focus on advertising efficiency and shifting sales to higher margin items, including generics, while continuing to expand our product offerings."

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. Eastern Time on October 22, 2012 until November 5, 2012 at 11:59 P.M. Eastern Time. To access the replay, call (866) 407-9272 (toll free) or (203) 369-0617, 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, 2012. 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.

PETMED EXPRESS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
September 30, March 31,
2012 2012
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 47,041 $ 46,801
Short term investments - available for sale 15,425 10,347
Accounts receivable, less allowance for doubtful accounts of $6 and $5, respectively 1,888 1,572
Inventories - finished goods 19,590 26,217
Prepaid expenses and other current assets 1,047 1,241
Deferred tax assets 852 1,230
Prepaid income taxes 349 199
Total current assets 86,192 87,607
Property and equipment, net 2,311 2,597
Intangible asset 860 860
Total assets $ 89,363 $ 91,064
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 6,956 $ 6,619
Accrued expenses and other current liabilities 2,067 2,772
Total current liabilities 9,023 9,391
Deferred tax liabilities 227 492
Total liabilities 9,250 9,883
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; 20,007 and 20,338 shares issued and outstanding, respectively 20 20
Retained earnings 80,015 81,108
Accumulated other comprehensive gain 69 44
Total shareholders' equity 80,113 81,181
Total liabilities and shareholders' equity $ 89,363 $ 91,064
PETMED EXPRESS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(In thousands, except for per share amounts) (Unaudited)
Three Months Ended Six Months Ended
September 30, September 30,
2012 2011 2012 2011
Sales $58,145 $58,225 $127,100 $131,803
Cost of sales 38,775 38,291 85,426 87,759
Gross profit 19,370 19,934 41,674 44,044
Operating expenses:
General and administrative 5,371 5,604 11,293 11,708
Advertising 7,424 7,904 17,274 18,004
Depreciation 249 346 577 687
Total operating expenses 13,044 13,854 29,144 30,399
Income from operations 6,326 6,080 12,530 13,645
Other income:
Interest income, net 64 72 123 158
Other, net -- 64 -- 63
Total other income 64 136 123 221
Income before provision for income taxes 6,390 6,216 12,653 13,866
Provision for income taxes 2,356 2,286 4,667 5,099
Net income $ 4,034 $ 3,930 $ 7,986 $ 8,767
Net income per common share:
Basic $ 0.20 $ 0.19 $ 0.40 $ 0.41
Diluted $ 0.20 $ 0.19 $ 0.40 $ 0.41
Weighted average number of common shares outstanding:
Basic 19,962 20,642 20,040 21,142
Diluted 20,062 20,710 20,154 21,238
Comprehensive income $ 4,050 $ 3,979 $ 8,011 $ 8,909
Cash dividends declared per common share $ 0.150 $ 0.125 $ 0.300 $ 0.250
PETMED EXPRESS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands) (Unaudited)
Six Months Ended
September 30,
2012 2011
Cash flows from operating activities:
Net income $ 7,986 $ 8,767
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation 577 687
Share based compensation 1,039 1,127
Deferred income taxes 113 114
Bad debt expense 27 25
(Increase) decrease in operating assets and increase (decrease) in liabilities:
Accounts receivable (343) 527
Inventories - finished goods 6,627 6,026
Prepaid income taxes (150) (26)
Prepaid expenses and other current assets 194 (923)
Accounts payable 337 86
Accrued expenses and other current liabilities (673) (215)
Net cash provided by operating activities 15,734 16,195
Cash flows from investing activities:
Net change in investments (5,053) 9,693
Purchases of property and equipment (291) (293)
Net cash (used in) provided by investing activities (5,344) 9,400
Cash flows from financing activities:
Dividends paid (6,117) (5,404)
Purchases of treasury stock (3,865) (22,642)
Tax adjustment related to restricted stock (168) (71)
Net cash used in financing activities (10,150) (28,117)
Net increase (decrease) in cash and cash equivalents 240 (2,522)
Cash and cash equivalents, at beginning of period 46,801 49,660
Cash and cash equivalents, at end of period $ 47,041 $ 47,138
Supplemental disclosure of cash flow information:
Cash paid for income taxes $ 4,872 $ 5,083
Dividends payable in accrued expenses $ 136 $ 135
CONTACT: For investment relations contact PetMed Express, Inc. Bruce S. Rosenbloom, CFO, 954-979-5995Source:PetMed Express, Inc.