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PetMed Express D/B/A 1-800-PetMeds Announces Its First Fiscal Quarter Financial Results and Its Quarterly Dividend of $0.27 Per Share

DELRAY BEACH, Fla., July 22, 2019 (GLOBE NEWSWIRE) -- PetMed Express, Inc. (PETS) today announced its financial results for the quarter ended June 30, 2019.  Net sales for the quarter ended June 30, 2019 were $80.0 million, compared to $87.4 million for the quarter ended June 30, 2018, a decrease of 8.5%.  Net income was $5.3 million, or $0.26 diluted earnings per share, for the quarter ended June 30, 2019, compared to net income of $12.6 million, or $0.62 diluted earnings per share, for the quarter ended June 30, 2018, a 57% decrease in diluted earnings per share.    

Menderes Akdag, President and CEO, commented: “Our sales and gross margins were negatively impacted by increased online competition and aggressive pricing in the market that forced us to reduce our prices.  Our average order value declined from $90 in the quarter ended June 30, 2018 to $86 in the June 30, 2019 quarter. During the quarter we bought back approximately 613,000 shares of our common stock for $11.5 million, with an average price of $18.73 per share.  Cash from operations for the quarter was negatively impacted by an $8.8 million increase in inventory, the result of cost-advantaged inventory buys that we made during the quarter.  We intend to return to normal inventory levels in future quarters.  One of our long-term strategic initiatives and primary goals has always been to have direct purchasing relationships with the major manufacturers.  We made further progress on this initiative in the current quarter, which may help improve our gross margins in the future.  In fiscal 2020, we will continue to be price competitive and will focus on optimizing our marketing in this more competitive environment and being more efficient with our advertising spending.  In addition, we will be investing in our e-commerce platform to better service our customers.  This platform will enable us to improve upon our already strong net promoter score of 83%.  We believe this customer satisfaction measure reflects the strong bond we have with our customers and will assist the Company with future customer retention.”

The Board of Directors declared a quarterly dividend of $0.27 per share on the Company’s common stock.  The dividend will be payable on August 9, 2019, to shareholders of record at the close of business on August 2, 2019.  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 July 22, 2019 until August 5, 2019 at 11:59 P.M.  To access the replay, call (800) 947-6586 (toll free) or (203) 369-3971, 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, 2019.  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 amounts)
           
    June 30,     March 31,
    2019     2019
ASSETS   (Unaudited)      
           
Current assets:          
Cash and cash equivalents $   83,398   $  100,529
Accounts receivable, less allowance for doubtful        
accounts of $33 and $39, respectively     2,145       2,542
Inventories - finished goods     30,168       21,370
Prepaid expenses and other current assets     1,506       1,408
Prepaid income taxes     -        582
Total current assets    117,217      126,431
           
Noncurrent assets:          
Property and equipment, net     26,760       27,136
Intangible assets     860       860
Total noncurrent assets     27,620       27,996
           
Total assets $  144,837   $  154,427
           
LIABILITIES AND SHAREHOLDERS' EQUITY          
           
Current liabilities:          
Accounts payable $   15,689   $   16,275
Accrued expenses and other current liabilities   3,325       2,351
Income taxes payable     1,241       - 
Total current liabilities     20,255       18,626
           
Deferred tax liabilities     939       1,121
           
Total liabilities     21,194       19,747
           
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;        
20,060 and 20,674 shares issued and outstanding, respectively   20       21
Additional paid-in capital     1,617       12,478
Retained earnings    121,997      122,172
           
Total shareholders' equity    123,643      134,680
           
Total liabilities and shareholders' equity $  144,837   $  154,427
           
           


PETMED EXPRESS, INC. AND SUBSIDIARIES  
 CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME  
 (In thousands, except for per share amounts) (Unaudited)  
           
     Three Months Ended  
     June 30,  
    2019   2018  
           
Sales  $  79,988  $  87,390  
Cost of sales    58,127    57,436  
           
Gross profit    21,861    29,954  
           
Operating expenses:          
General and administrative     6,508     6,934  
Advertising     8,624     6,707  
Depreciation     568     556  
Total operating expenses    15,700    14,197  
           
Income from operations     6,161    15,757  
           
Other income:          
Interest income, net     567     379  
Other, net     257     317  
Total other income     824     696  
           
Income before provision for income taxes   6,985    16,453  
           
Provision for income taxes     1,642     3,871  
           
Net income  $   5,343  $  12,582  
           
Comprehensive income  $   5,343  $  12,582  
           
Net income per common share:          
Basic  $   0.26  $   0.62  
Diluted  $   0.26  $   0.62  
           
Weighted average number of common shares outstanding:  
Basic    20,235    20,408  
Diluted    20,245    20,449  
           
Cash dividends declared per common share  $   0.27  $   0.25  
           
           


PETMED EXPRESS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (In thousands) (Unaudited)
 
     Three Months Ended
     June 30,
    2019     2018  
Cash flows from operating activities:        
Net income  $   5,343    $   12,582  
Adjustments to reconcile net income to net cash    
  provided by operating activities:        
Depreciation      568       556  
Share based compensation     635       719  
Deferred income taxes     (182 )     (165 )
Bad debt expense     25       32  
(Increase) decrease in operating assets    
  and increase (decrease) in liabilities:    
Accounts receivable     372       (171 )
Inventories - finished goods     (8,798 )     (1,709 )
Prepaid income taxes     582       788  
Prepaid expenses and other current assets   (98 )     (396 )
Accounts payable     (586 )     5,908  
Accrued expenses and other current liabilities   934       643  
Income taxes payable     1,241       3,247  
Net cash provided by operating activities   36       22,034  
         
Cash flows from investing activities:        
Purchases of property and equipment   (192 )     (306 )
 Net cash used in investing activities     (192 )     (306 )
         
Cash flows from financing activities:        
Purchased of treasury stock    (11,496 )     -   
Dividends paid     (5,479 )     (5,103 )
 Net cash used in financing activities    (16,975 )     (5,103 )
         
Net (decrease) increase in cash and cash equivalents  (17,131 )     16,625  
Cash and cash equivalents, at beginning of period  100,529       77,936  
         
Cash and cash equivalents, at end of period  $   83,398    $   94,561  
         
Supplemental disclosure of cash flow information:    
         
Dividends payable in accrued expenses  $   243    $   288