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

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. (NASDAQ: 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 [phone] (toll free) or [phone]. 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 [phone] (toll free) or [phone], 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