PETMED EXPRESS INC - FORM 8-K - EX-99.1 - PRESS RELEASE

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8-K - CURRENT REPORT - PETMED EXPRESS INC	pets_8k.htm

Exhibit 99.1

PETMED EXPRESS D/B/A 1-800-PETMEDS ANNOUNCES ITS SECOND QUARTER FINANCIAL RESULTS

AND ITS $0.19 PER SHARE QUARTERLY DIVIDEND

Second Quarter Net Income Increased 9%

Second Quarter Sales Increased 7%

Pompano Beach, Florida, October 24, 2016 - PetMed Express, Inc. (NASDAQ: PETS) today announced its financial results for the quarter ended September 30, 2016. Net income was $4.9 million, or $0.24 diluted per share, compared to net income of $4.5 million, or $0.22 diluted per share, for the quarter ended September 30, 2015, an 8.8% increase to net income. Net income for the six months ended September 30, 2016 was $11.5 million, or $0.56 diluted per share, compared to net income of $10.3 million, or $0.51 diluted per share, for the six months ended September 30, 2015, a 12% increase to net income. Net sales for the quarter ended September 30, 2016 were $60.8 million, compared to $56.7 million for the quarter ended September 30, 2015, an increase of 7.2%. Net sales for the six months ended September 30, 2016 were $133.3 million, compared to $128.4 million for the six months ended September 30, 2015, an increase of 3.8%. New order sales increased 6.3% to $10.7 million for the quarter ended September 30, 2016, compared to $10.1 million for the same quarter in the prior year. The Company’s online sales for the quarter ended September 30, 2016 were approximately 82% of all sales, compared to 81% for the same quarter the prior year.

Menderes Akdag, CEO and President, commented: “During the September quarter we saw increases in both our new order and reorder sales, with reorder sales increasing 7.4% to $50.1 million for the quarter ended September 30, 2016 compared to $46.7 million for the same quarter the prior year. Our new customer acquisition costs were reduced to $33 for the quarter ended September 30, 2016, compared to $49 for the same period in the prior year. We also saw continued improvement on our bottom line results for the quarter ended September 30, 2016, due to a reduction in our operating expenses, which decreased by about 384 basis points, attributable to a reduction in advertising spending. Cash flow from operations was $27.8 million for the six month ended September 30, 2016, compared to $14.0 million for the six month ended September 30, 2015, with a majority of the increase due to a reduction in inventory. We are currently preparing to move into our new corporate headquarters and distribution facility, which is expected to occur in our third fiscal quarter.”

The Board of Directors declared a quarterly dividend of $0.19 per share on the Company’s common stock. The dividend will be payable on November 18, 2016, to shareholders of record at the close of business on November 7, 2016. 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 24, 2016 until November 7, 2016 at 11:59 P.M. To access the replay, call (800) 839-2310 (toll free) or (203) 369-3635 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, 2016. 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, 954-979-5995.

Exhibit 99.1 Page 1 of 4

PETMED EXPRESS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except for per share data)


	September 30,		March 31,
	2016		2016
	(Unaudited)
ASSETS

Current assets:
Cash and cash equivalents	$	51,896	$	37,639
Accounts receivable, less allowance for doubtful accounts of $10 and $13, respectively		1,369		1,724
Inventories - finished goods		14,820		25,586
Prepaid expenses and other current assets		6,486		2,435
Prepaid income taxes		21		243
Total current assets		74,592		67,627

Noncurrent assets:
Property and equipment, net		20,576		20,929
Intangible assets		860		860
Deferred tax assets		499		863
Total noncurrent assets		21,935		22,652

Total assets	$	96,527	$	90,279

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
Accounts payable	$	6,147	$	5,004
Accrued expenses and other current liabilities		2,416		2,080
Total liabilities		8,563		7,084

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; 20,527 and 20,447 shares issued and outstanding, respectively		21		20
Additional paid-in capital		5,932		4,871
Retained earnings		82,002		78,295

Total shareholders' equity		87,964		83,195

Total liabilities and shareholders' equity	$	96,527	$	90,279

Exhibit 99.1 Page 2 of 4

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,
	2016		2015			2016		2015

Sales	$	60,791	$	56,725		$	133,278	$	128,359
Cost of sales		42,727		37,812			92,762		86,480

Gross profit		18,064		18,913			40,516		41,879

Operating expenses:
General and administrative		5,747		5,388			11,845		11,187
Advertising		4,382		6,249			10,142		14,134
Depreciation		204		186			398		377
Total operating expenses		10,333		11,823			22,385		25,698

Income from operations		7,731		7,090			18,131		16,181

Other income:
Interest income, net		32		55			60		105
Other, net		23		(4	)		76		(8	)
Total other income		55		51			136		97

Income before provision for income taxes		7,786		7,141			18,267		16,278

Provision for income taxes		2,887		2,639			6,774		6,019

Net income	$	4,899	$	4,502		$	11,493	$	10,259

Net change in unrealized gain (loss) on short term investments		—		16			—		(19	)

Comprehensive income	$	4,899	$	4,518		$	11,493	$	10,240

Net income per common share:
Basic	$	0.24	$	0.22		$	0.57	$	0.51
Diluted	$	0.24	$	0.22		$	0.56	$	0.51

Weighted average number of common shares outstanding:
Basic		20,234		20,126			20,208		20,100
Diluted		20,377		20,246			20,355		20,222

Cash dividends declared per common share	$	0.19	$	0.18		$	0.38	$	0.36

Exhibit 99.1 Page 3 of 4

PETMED EXPRESS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands) (Unaudited)


	Six Months Ended
	September 30,
	2016			2015
Cash flows from operating activities:
Net income	$	11,493		$	10,259
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		398			377
Share based compensation		946			777
Deferred income taxes		364			4
Bad debt expense		352			227
(Increase) decrease in operating assets and increase (decrease) in liabilities:
Accounts receivable		3			81
Inventories - finished goods		10,765			664
Prepaid income taxes		222			(60	)
Prepaid expenses and other current assets		1,764			(86	)
Accounts payable		1,143			2,125
Income taxes payable		—			(50	)
Accrued expenses and other current liabilities		335			(277	)
Net cash provided by operating activities		27,785			14,041

Cash flows from investing activities:
Net change in investments		—			(33	)
Purchases of property and equipment		(5,859	)		(175	)
Net cash used in investing activities		(5,859	)		(208	)

Cash flows from financing activities:
Dividends paid		(7,784	)		(7,358	)
Excess tax benefits related to restricted stock		115			92
Net cash used in financing activities		(7,669	)		(7,266	)

Net increase in cash and cash equivalents		14,257			6,567
Cash and cash equivalents, at beginning of period		37,639			35,613

Cash and cash equivalents, at end of period	$	51,896		$	42,180

Supplemental disclosure of cash flow information:

Cash paid for income taxes	$	6,186		$	6,033

Prepaid property and equipment in current assets	$	5,815		$	—

Dividends payable in accrued expenses	$	144		$	154

Exhibit 99.1 Page 4 of 4

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