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PetMed Express D/B/A 1-800-PetMeds Announces Its Third Quarter Financial Results and Declares Its $0.27 Per Share Dividend

DELRAY BEACH, Fla., Jan. 22, 2019 (GLOBE NEWSWIRE) -- PetMed Express, Inc. (PETS) today announced its financial results for the quarter ended December 31, 2018. Net sales were $60.1 million for both the quarters ended December 31, 2018 and 2017. Reorder sales for the quarter ended December 31, 2018 were $53.3 million, compared to $50.9 million for the quarter ended December 31, 2017, an increase of 4.6%. Net sales for the nine months ended December 31, 2018 were $218.9 million, compared to $206.5 million for the nine months ended December 31, 2017, an increase of 6.0%. Reorder sales for the nine months ended December 31, 2018 were $185.9 million, compared to $170.5 million for the nine months ended December 31, 2017, an increase of 9.0%. Net income for the quarter ended December 31, 2018 was $7.8 million, or $0.38 diluted per share, compared to net income of $9.1 million, or $0.44 diluted per share, for the quarter ended December 31, 2017, a 14% decrease to net income. Net income for the nine months ended December 31, 2018 was $31.1 million, or $1.52 diluted per share, compared to net income of $27.1 million, or $1.33 diluted per share, for the nine months ended December 31, 2017, a 15% increase to net income. Average order size decreased to $84 for the quarter ended December 31, 2018, compared to $86 for the same quarter in the prior year. For the nine months ended December 31, 2018, online sales increased 7.0% to $185.3 million from $173.2 million for the same period the prior year, and were approximately 85% of all sales.

Menderes Akdag, CEO and President, commented: “The market was much more competitive during the quarter, and as a result we gave additional discounts to our customers to stimulate sales, which had a negative effect on our gross margins. We will continue to be aggressive with pricing and promotions, and increase advertising to address this more competitive online market.”

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 February 15, 2019, to shareholders of record at the close of business on February 4, 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 January 22, 2019 until February 5, 2019 at 11:59 P.M. To access the replay, call (866) 457-5505 (toll free) or (203) 369-1279 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, 2018. 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)

December 31,

March 31,

2018

2018

ASSETS

(Unaudited)

Current assets:

Cash and cash equivalents

$

93,166

$

77,936

Accounts receivable, less allowance for doubtful accounts of $19 and $35, respectively

1,269

2,292

Inventories - finished goods

32,247

23,337

Prepaid expenses and other current assets

1,266

882

Prepaid income taxes

525

788

Total current assets

128,473

105,235

Noncurrent assets:

Property and equipment, net

27,584

28,741

Intangible assets

860

860

Total noncurrent assets

28,444

29,601

Total assets

$

156,917

$

134,836

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

Accounts payable

$

20,283

$

15,274

Accrued expenses and other current liabilities

2,769

2,835

Total current liabilities

23,052

18,109

Deferred tax liabilities

1,007

996

Total liabilities

24,059

19,105

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; 20,674 and 20,601 shares issued and outstanding, respectively

21

21

Additional paid-in capital

11,693

9,381

Retained earnings

121,135

106,320

Total shareholders' equity

132,858

115,731

Total liabilities and shareholders' equity

$

156,917

$

134,836

PETMED EXPRESS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands, except for per share amounts) (Unaudited)

Three Months Ended

Nine Months Ended

December 31,

December 31,

2018

2017

2018

2017

Sales

$

60,068

$

60,110

$

218,854

$

206,478

Cost of sales

40,687

38,166

144,264

133,590

Gross profit

19,381

21,944

74,590

72,888

Operating expenses:

General and administrative

5,793

5,818

18,927

18,222

Advertising

3,619

4,126

15,626

14,944

Depreciation

556

532

1,664

1,590

Total operating expenses

9,968

10,476

36,217

34,756

Income from operations

9,413

11,468

38,373

38,132

Other income:

Interest income, net

508

191

1,315

417

Other, net

255

265

827

755

Total other income

763

456

2,142

1,172

Income before provision for income taxes

10,176

11,924

40,515

39,304

Provision for income taxes

2,389

2,860

9,394

12,204

Net income

$

7,787

$

9,064

$

31,121

$

27,100

Comprehensive income

$

7,787

$

9,064

$

31,121

$

27,100

Net income per common share:

Basic

$

0.38

$

0.45

$

1.52

$

1.33

Diluted

$

0.38

$

0.44

$

1.52

$

1.33

Weighted average number of common shares outstanding:

Basic

20,483

20,368

20,452

20,337

Diluted

20,493

20,425

20,487

20,437

Cash dividends declared per common share

$

0.27

$

0.20

$

0.79

$

0.60

PETMED EXPRESS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands) (Unaudited)

Nine Months Ended

December 31,

2018

2017

Cash flows from operating activities:

Net income

$

31,121

$

27,100

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation

1,664

1,590

Share based compensation

2,312

1,858

Deferred income taxes

11

(412

)

Bad debt expense

49

72

(Increase) decrease in operating assets and increase (decrease) in liabilities:

Accounts receivable

974

21

Inventories - finished goods

(8,910

)

(1,679

)

Prepaid income taxes

263

-

Prepaid expenses and other current assets

(384

)

45

Accounts payable

5,009

(2,795

)

Income taxes payable

-

8,815

Accrued expenses and other current liabilities

(84

)

530

Net cash provided by operating activities

32,025

35,145

Cash flows from investing activities:

Purchases of property and equipment

(507

)

(564

)

Net cash used in investing activities

(507

)

(564

)

Cash flows from financing activities:

Dividends paid

(16,288

)

(12,314

)

Net cash used in financing activities

(16,288

)

(12,314

)

Net increase in cash and cash equivalents

15,230

22,267

Cash and cash equivalents, at beginning of period

77,936

58,730

Cash and cash equivalents, at end of period

$

93,166

$

80,997

Supplemental disclosure of cash flow information:

Cash paid for income taxes

$

9,120

$

3,801

Dividends payable in accrued expenses

$

258

$

246