Quarterly Reorder Sales Increased 1.4%
Gross Margins Improved Sequentially from 27.3% to 28.6%
Operating Margins Increased 430 Basis Points Sequentially
DELRAY BEACH, Fla., Oct. 21, 2019 (GLOBE NEWSWIRE) -- PetMed Express, Inc. (NASDAQ: PETS) today announced its financial results for the quarter ended September 30, 2019. Net sales for the quarter ended September 30, 2019 were $69.9 million, compared to $71.4 million for the quarter ended September 30, 2018, a decrease of 2.0%. Net income was $6.7 million, or $0.33 diluted per share, for the quarter ended September 30, 2019, compared to net income of $10.8 million, or $0.52 diluted per share, for the quarter ended September 30, 2018, a 36% decrease in diluted earnings per share. Reorder sales increased 1.4%, to $61.9 million for the quarter ended September 30, 2019, compared to $61.0 million for the same quarter in the prior year.
Menderes Akdag, CEO and President, commented: “We were encouraged with improvements to our reorder sales and gross and operating margins during the quarter. Gross margins improved by 130 basis points from 27.3% in the June quarter to 28.6% in the September quarter, and operating margins improved by 430 basis points from 7.7% in the June quarter to 12.0% in the September quarter. The gross margin increase can be attributed to our success in obtaining direct purchasing relationships with the major manufacturers, and the implementation of the minimum advertised price (MAP) policy by some of the major manufacturers. We anticipate MAP pricing to stabilize pet medication prices throughout the online channel. We made further progress in October, and we now have direct relationships with all of the major manufacturers, which may help further improve our gross margins in the future. We are also pleased to announce that on September 1st we launched our new PetMeds® Rewards Program. This customer loyalty program allows our customers to accrue points to receive additional discounts on future orders. This program will increase our engagement with our customer base and should help promote future reorder sales. Net cash from operations for the six months ended September 30, 2019 was $17.3 million, compared to $20.4 million for the same period last year. 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 83.5%. 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 November 15, 2019, to shareholders of record at the close of business on November 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 October 21, 2019 until November 4, 2019 at 10:59 P.M Eastern Time. 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, 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, 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) | ||||
| September 30, | March 31, | |||
| 2019 | 2019 | |||
| ASSETS | (Unaudited) | |||
| Current assets: | ||||
| Cash and cash equivalents | $ | 94,897 | $ | 100,529 |
| Accounts receivable, less allowance for doubtful | ||||
| accounts of $22 and $39, respectively | 1,466 | 2,542 | ||
| Inventories - finished goods | 19,061 | 21,370 | ||
| Prepaid expenses and other current assets | 2,841 | 1,408 | ||
| Prepaid income taxes | - | 582 | ||
| Total current assets | 118,265 | 126,431 | ||
| Noncurrent assets: | ||||
| Property and equipment, net | 26,412 | 27,136 | ||
| Intangible assets | 860 | 860 | ||
| Total noncurrent assets | 27,272 | 27,996 | ||
| Total assets | $ | 145,537 | $ | 154,427 |
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||
| Current liabilities: | ||||
| Accounts payable | $ | 15,155 | $ | 16,275 |
| Accrued expenses and other current liabilities | 2,871 | 2,351 | ||
| Income taxes payable | 525 | - | ||
| Total current liabilities | 18,551 | 18,626 | ||
| Deferred tax liabilities | 1,395 | 1,121 | ||
| Total liabilities | 19,946 | 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; | ||||
| 20,175 and 20,674 shares issued and outstanding, respectively | 20 | 21 | ||
| Additional paid-in capital | 2,347 | 12,478 | ||
| Retained earnings | 123,215 | 122,172 | ||
| Total shareholders' equity | 125,591 | 134,680 | ||
| Total liabilities and shareholders' equity | $ | 145,537 | $ | 154,427 |
| 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, | |||||||
| 2019 | 2018 | 2019 | 2018 | |||||
| Sales | $ | 69,936 | $ | 71,396 | $ | 149,924 | $ | 158,786 |
| Cost of sales | 49,934 | 46,141 | 108,061 | 103,577 | ||||
| Gross profit | 20,002 | 25,255 | 41,863 | 55,209 | ||||
| Operating expenses: | ||||||||
| General and administrative | 6,303 | 6,200 | 12,811 | 13,134 | ||||
| Advertising | 4,756 | 5,300 | 13,380 | 12,007 | ||||
| Depreciation | 572 | 552 | 1,140 | 1,108 | ||||
| Total operating expenses | 11,631 | 12,052 | 27,331 | 26,249 | ||||
| Income from operations | 8,371 | 13,203 | 14,532 | 28,960 | ||||
| Other income: | ||||||||
| Interest income, net | 459 | 428 | 1,026 | 807 | ||||
| Other, net | 304 | 255 | 561 | 572 | ||||
| Total other income | 763 | 683 | 1,587 | 1,379 | ||||
| Income before provision for income taxes | 9,134 | 13,886 | 16,119 | 30,339 | ||||
| Provision for income taxes | 2,469 | 3,134 | 4,111 | 7,005 | ||||
| Net income | $ | 6,665 | $ | 10,752 | $ | 12,008 | $ | 23,334 |
| Comprehensive income | $ | 6,665 | $ | 10,752 | $ | 12,008 | $ | 23,334 |
| Net income per common share: | ||||||||
| Basic | $ | 0.33 | $ | 0.53 | $ | 0.60 | $ | 1.14 |
| Diluted | $ | 0.33 | $ | 0.52 | $ | 0.60 | $ | 1.14 |
| Weighted average number of common shares outstanding: | ||||||||
| Basic | 19,963 | 20,463 | 20,098 | 20,436 | ||||
| Diluted | 19,973 | 20,520 | 20,109 | 20,485 | ||||
| Cash dividends declared per common share | $ | 0.27 | $ | 0.27 | $ | 0.54 | $ | 0.52 |
| PETMED EXPRESS, INC. AND SUBSIDIARIES | ||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||
| (In thousands) (Unaudited) | ||||||
| Six Months Ended | ||||||
| September 30, | ||||||
| 2019 | 2018 | |||||
| Cash flows from operating activities: | ||||||
| Net income | $ | 12,008 | $ | 23,334 | ||
| Adjustments to reconcile net income to net cash | ||||||
| provided by operating activities: | ||||||
| Depreciation | 1,140 | 1,108 | ||||
| Share based compensation | 1,365 | 1,500 | ||||
| Deferred income taxes | 274 | 189 | ||||
| Bad debt expense | 64 | 49 | ||||
| (Increase) decrease in operating assets | ||||||
| and increase (decrease) in liabilities: | ||||||
| Accounts receivable | 1,012 | 457 | ||||
| Inventories - finished goods | 2,309 | (5,279 | ) | |||
| Prepaid income taxes | 582 | 170 | ||||
| Prepaid expenses and other current assets | (1,433 | ) | (94 | ) | ||
| Accounts payable | (1,120 | ) | (996 | ) | ||
| Accrued expenses and other current liabilities | 568 | (36 | ) | |||
| Income taxes payable | 525 | - | ||||
| Net cash provided by operating activities | 17,294 | 20,402 | ||||
| Cash flows from investing activities: | ||||||
| Purchases of property and equipment | (416 | ) | (450 | ) | ||
| Net cash used in investing activities | (416 | ) | (450 | ) | ||
| Cash flows from financing activities: | ||||||
| Repurchase and retirement of common stock | (11,496 | ) | - | |||
| Dividends paid | (11,014 | ) | (10,756 | ) | ||
| Net cash used in financing activities | (22,510 | ) | (10,756 | ) | ||
| Net (decrease) increase in cash and cash equivalents | (5,632 | ) | 9,196 | |||
| Cash and cash equivalents, at beginning of period | 100,529 | 77,936 | ||||
| Cash and cash equivalents, at end of period | $ | 94,897 | $ | 87,132 | ||
| Supplemental disclosure of cash flow information: | ||||||
| Cash paid for income taxes | $ | 2,730 | $ | 6,645 | ||
| Dividends payable in accrued expenses | $ | 155 | $ | 207 | ||