PetMed Express d/b/a 1-800-PetMeds Announces Its Second Fiscal Quarter Financial Results and Its Quarterly Dividend of $0.28 per Share - PetMed Express (NASDAQ:PETS)

Diluted EPS $0.42 vs $0.33 per share
Quarterly Reorder Sales Increased 9.6%
Gross Margins Improved Sequentially from 27.8% to 30.5%

DELRAY BEACH, Fla., Oct. 26, 2020 (GLOBE NEWSWIRE) -- PetMed Express, Inc. PETS today announced its financial results for the quarter ended September 30, 2020. Net sales for the quarter ended September 30, 2020 were $75.4 million, compared to $69.9 million for the quarter ended September 30, 2019, an increase of 7.9%. Net sales for the six months ended September 30, 2020 were $171.6 million, compared to $149.9 million for the six months ended September 30, 2019, an increase of 14.5%. Net income was $8.4 million, or $0.42 diluted per share, for the quarter ended September 30, 2020, compared to net income of $6.7 million, or $0.33 diluted per share, for the quarter ended September 30, 2019, a 26.2% increase to net income. Net income was $16.2 million, or $0.81 diluted per share, for the six months ended September 30, 2020, compared to net income of $12.0 million, or $0.60 diluted per share, for the six months ended September 30, 2019, a 34.7% increase to net income. Reorder sales increased 9.6%, to $67.8 million for the quarter ended September 30, 2020, compared to $61.9 million for the same quarter in the prior year. Reorder sales increased 14.4%, to $148.2 million for the six months ended September 30, 2020, compared to $129.6 million for the same period in the prior year.

Menderes Akdag, CEO and President, commented: "We were encouraged with the strength of our reorder sales and gross and operating margins during the quarter. Gross margins improved by 270 basis points from 27.8% in the June quarter to 30.5% in the September quarter, and operating margins improved by 400 basis points from 9.8% in the June quarter to 13.9% in the September quarter. The sequential gross margin increase can be attributed to a change in our product mix, with a shift to higher margin prescription medications. The gross margin increase for the three and six months ended September 30, 2020 was also due to the benefit of having direct relationships with all major manufacturers and the enforcement of their minimum advertised price policies. Our average order size increased from $85 to $87 for the quarters ended September 30, 2019 and 2020, respectively. In fiscal 2021, we are focusing on redesigning our website and mobile app to optimize our customers' digital experience."

The Board of Directors declared a quarterly dividend of $0.28 per share on the Company's common stock. The dividend will be payable on November 20, 2020, to shareholders of record at the close of business on November 9, 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, the Company 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 26, 2020 until November 9, 2020 at 11:59 P.M Eastern Time. To access the replay, call (800) 337-8653 (toll free) or (402) 220-9669, and enter passcode 5500.

Founded in 1996, PetMed Express is America's Largest and Most Trusted 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, 2020. 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, except for per share data)

		September 30,	March 31,
		2020	2020

ASSETS		(Unaudited)

Current assets:
Cash and cash equivalents	$	106,344	$	103,762
Accounts receivable, less allowance for doubtful
accounts of $34 and $59, respectively		2,212		3,843
Inventories - finished goods		21,451		17,884
Prepaid expenses and other current assets		2,613		3,529
Total current assets		132,620		129,018

Noncurrent assets:
Property and equipment, net		25,469		25,445
Intangible assets		860		860
Total noncurrent assets		26,329		26,305

Total assets	$	158,949	$	155,323

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
Accounts payable	$	16,058	$	19,658
Accrued expenses and other current liabilities		4,486		4,214
Income taxes payable		618		471
Total current liabilities		21,162		24,343

Deferred tax liabilities		1,378		970

Total liabilities		22,540		25,313

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;
20,272 and 20,166 shares issued and outstanding, respectively		20		20
Additional paid-in capital		5,317		3,804
Retained earnings		131,063		126,177

Total shareholders' equity		136,409		130,010

Total liabilities and shareholders' equity	$	158,949	$	155,323

PETMED EXPRESS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except for per share amounts) (Unaudited)

		Three Months Ended				Six Months Ended
		September 30,				September 30,
		2020		2019		2020		2019

Sales	$	75,436	$	69,936	$	171,640	$	149,924
Cost of sales		52,418		49,934		121,837		108,061

Gross profit		23,018		20,002		49,803		41,863

Operating expenses:
General and administrative		6,809		6,303		14,563		12,811
Advertising		5,131		4,756		14,164		13,380
Depreciation		607		572		1,169		1,140
Total operating expenses		12,547		11,631		29,896		27,331

Income from operations		10,471		8,371		19,907		14,532

Other income:
Interest income, net		66		459		156		1,026
Other, net		338		304		593		561
Total other income		404		763		749		1,587

Income before provision for income taxes		10,875		9,134		20,656		16,119

Provision for income taxes		2,463		2,469		4,476		4,111

Net income	$	8,412	$	6,665	$	16,180	$	12,008

Net income per common share:
Basic	$	0.42	$	0.33	$	0.81	$	0.60
Diluted	$	0.42	$	0.33	$	0.81	$	0.60

Weighted average number of common shares outstanding:
Basic		20,063		19,963		20,024		20,098
Diluted		20,154		19,973		20,098		20,109

Cash dividends declared per common share	$	0.28	$	0.27	$	0.56	$	0.54

PETMED EXPRESS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands) (Unaudited)

		Six Months Ended
		September 30,
		2020			2019
Cash flows from operating activities:
Net income	$	16,180		$	12,008
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation		1,169			1,140
Share based compensation		1,513			1,365
Deferred income taxes		408			274
Bad debt expense		61			64
(Increase) decrease in operating assets
and increase (decrease) in liabilities:
Accounts receivable		1,570			1,012
Inventories - finished goods		(3,567	)		2,309
Prepaid income taxes		-			582
Prepaid expenses and other current assets		916			(1,433	)
Accounts payable		(3,600	)		(1,120	)
Accrued expenses and other current liabilities		391			568
Income taxes payable		147			525
Net cash provided by operating activities		15,188			17,294

Cash flows from investing activities:
Purchases of property and equipment		(1,193	)		(416	)
Net cash used in investing activities		(1,193	)		(416	)

Cash flows from financing activities:
Repurchase and retirement of common stock		-			(11,496	)
Dividends paid		(11,413	)		(11,014	)
Net cash used in financing activities		(11,413	)		(22,510	)

Net increase (decrease) in cash and cash equivalents		2,582			(5,632	)
Cash and cash equivalents, at beginning of period		103,762			100,529

Cash and cash equivalents, at end of period	$	106,344		$	94,897

Supplemental disclosure of cash flow information:

Cash paid for income taxes	$	4,206		$	2,730

Dividends payable in accrued expenses	$	126		$	155

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