EX-99.1 2 pets_ex99z1.htm PRESS RELEASE Press Release

 



Exhibit 99.1


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

FINANCIAL RESULTS AND ITS $0.17 PER SHARE QUARTERLY DIVIDEND


Pompano Beach, Florida, October 20, 2014 - PetMed Express, Inc. (NASDAQ: PETS) today announced its financial results for the quarter ended September 30, 2014. Net sales for the quarter ended September 30, 2014 were $57.6 million, compared to $60.5 million for the quarter ended September 30, 2013, a decrease of 4.8%. Net sales for the six months ended September 30, 2014 were $130.1 million, compared to $134.7 million for the quarter ended September 30, 2013, a decrease of 3.4%. Excluding a one-time charge for an IT-related discontinued project, net income was $3.8 million, or $0.19 diluted per share, for the quarter ended September 30, 2014, compared to net income of $4.2 million, or $0.21 diluted per share, for the quarter ended September 30, 2013, and net income was $8.8 million, or $0.44 diluted per share, for the six months ended September 30, 2014, compared to net income of $8.9 million, or $0.44 diluted per share, for the six months ended September 30, 2013. The one-time IT-related discontinued project cost of $1.7 million was expensed in the September quarter. The after tax net impact of this charge was $1.1 million, or $0.05 diluted per share. There was no impact to the Company’s cash flow and no further charges are expected in the future related to this discontinued project. The Company’s online sales for the quarter ended September 30, 2014 were approximately 80% of all sales, compared to 79% for the same quarter the prior year.


Menderes Akdag, CEO and President, commented: “While navigating through a shortened flea and tick season, we were able to maintain increased gross profit margins and an increased average order size. For the quarter ended September 30, 2014 our gross profit increased 23 basis points, which can be attributed to a shift in sales to higher margin items. Our average order size increased to $75 for the quarter ended September 30, 2014, compared to $73 for the same quarter in the prior year. Cash from operations was $23.6 million for the quarter ended September 30, 2014, compared to $24.4 million for the quarter ended September 30, 2013. For the remainder of Fiscal 2015 we are focusing on improving our marketing efforts to increase sales.”


The Board of Directors declared a quarterly dividend of $0.17 per share on the Company’s common stock. The dividend will be payable on November 14, 2014, to shareholders of record at the close of business on November 3, 2014. 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 20, 2014 until November 3, 2014 at 11:59 P.M. To access the replay, call (866) 420-4828 (toll free) or (203) 369-0790 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, 2014. 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)


 

 

September 30,

 

 

March 31,

 

 

 

2014

 

 

2014

 

 

 

(Unaudited)

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

34,579

 

 

$

18,305

 

Short term investments - available for sale

 

 

15,583

 

 

 

15,539

 

Accounts receivable, less allowance for doubtful accounts of $8 and $7, respectively

 

 

1,957

 

 

 

1,761

 

Inventories - finished goods

 

 

20,535

 

 

 

35,727

 

Prepaid expenses and other current assets

 

 

1,924

 

 

 

1,761

 

Deferred tax assets

 

 

716

 

 

 

1,062

 

Prepaid income taxes

 

 

1,870

 

 

 

54

 

Total current assets

 

 

77,164

 

 

 

74,209

 

 

 

 

 

 

 

 

 

 

Noncurrent assets:

 

 

 

 

 

 

 

 

Prepaid expenses

 

 

-

 

 

 

1,996

 

Property and equipment, net

 

 

1,361

 

 

 

1,310

 

Intangible assets

 

 

860

 

 

 

860

 

Deferred tax assets

 

 

44

 

 

 

-

 

 

 

 

 

 

 

 

 

 

Total assets

 

$

79,429

 

 

$

78,375

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

5,248

 

 

$

5,768

 

Accrued expenses and other current liabilities

 

 

2,334

 

 

 

2,325

 

Total current liabilities

 

 

7,582

 

 

 

8,093

 

 

 

 

 

 

 

 

 

 

Deferred tax liabilities

 

 

-

 

 

 

65

 

 

 

 

 

 

 

 

 

 

Total liabilities

 

 

7,582

 

 

 

8,158

 

 

 

 

 

 

 

 

 

 

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;20,268 and 20,190 shares issued and outstanding, respectively

 

 

20

 

 

 

20

 

Additional paid-in capital

 

 

2,370

 

 

 

1,578

 

Retained earnings

 

 

69,478

 

 

 

68,647

 

Accumulated other comprehensive loss

 

 

(30

)

 

 

(37

)

 

 

 

 

 

 

 

 

 

Total shareholders' equity

 

 

71,847

 

 

 

70,217

 

 

 

 

 

 

 

 

 

 

Total liabilities and shareholder’s equity

 

$

79,429

 

 

$

78,375

 



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,

 

 

 

2014

 

 

2013

 

 

2014

 

 

2013

 

 

  

                        

  

  

                        

  

  

                        

  

  

                        

  

Sales

 

$

57,576

 

 

$

60,479

 

 

$

130,117

 

 

$

134,673

 

Cost of sales

 

 

39,117

 

 

 

41,227

 

 

 

87,886

 

 

 

91,408

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

 

18,459

 

 

 

19,252

 

 

 

42,231

 

 

 

43,265

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General and administrative

 

 

5,381

 

 

 

5,505

 

 

 

11,256

 

 

 

11,378

 

Advertising

 

 

6,915

 

 

 

6,985

 

 

 

16,811

 

 

 

17,380

 

Discontinued project costs

 

 

1,714

 

 

 

-

 

 

 

1,714

 

 

 

-

 

Depreciation

 

 

159

 

 

 

230

 

 

 

322

 

 

 

478

 

Total operating expenses

 

 

14,169

 

 

 

12,720

 

 

 

30,103

 

 

 

29,236

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from operations

 

 

4,290

 

 

 

6,532

 

 

 

12,128

 

 

 

14,029

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income, net

 

 

44

 

 

 

48

 

 

 

88

 

 

 

95

 

Other, net

 

 

(2

)

 

 

1

 

 

 

7

 

 

 

(1

)

Total other income

 

 

42

 

 

 

49

 

 

 

95

 

 

 

94

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before provision for income taxes

 

 

4,332

 

 

 

6,581

 

 

 

12,223

 

 

 

14,123

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for income taxes

 

 

1,600

 

 

 

2,431

 

 

 

4,518

 

 

 

5,218

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

2,732

 

 

$

4,150

 

 

$

7,705

 

 

$

8,905

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

(1

)

 

 

-

 

 

 

7

 

 

 

(46

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive income

 

$

2,731

 

 

$

4,150

 

 

$

7,712

 

 

$

8,859

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.14

 

 

$

0.21

 

 

$

0.39

 

 

$

0.45

 

Diluted

 

$

0.14

 

 

$

0.21

 

 

$

0.38

 

 

$

0.44

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

20,016

 

 

 

19,902

 

 

 

19,988

 

 

 

19,875

 

Diluted

 

 

20,146

 

 

 

20,044

 

 

 

20,119

 

 

 

20,024

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash dividends declared per common share

 

$

0.17

 

 

$

0.17

 

 

$

0.34

 

 

$

0.32

 



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,

 

 

 

2014

 

 

2013

 

Cash flows from operating activities:

  

                        

  

  

                        

  

Net income

 

$

7,705

 

 

$

8,905

 

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

 

 

 

 

 

 

 

 

Depreciation

 

 

322

 

 

 

478

 

Share based compensation

 

 

753

 

 

 

732

 

Discontinued project costs

 

 

1,714

 

 

 

-

 

Deferred income taxes

 

 

237

 

 

 

193

 

Bad debt expense

 

 

40

 

 

 

49

 

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

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(235

)

 

 

6

 

Inventories - finished goods

 

 

15,192

 

 

 

14,260

 

Prepaid income taxes

 

 

(1,816

)

 

 

(779

)

Prepaid expenses and other current assets

 

 

119

 

 

 

(1,096

)

Accounts payable

 

 

(521

)

 

 

1,865

 

Income taxes payable

 

 

-

 

 

 

(162

)

Accrued expenses and other current liabilities

 

 

80

 

 

 

(93

)

Net cash provided by operating activities

 

 

23,590

 

 

 

24,358

 

 

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Net change in investments

 

 

(37

)

 

 

(41

)

Purchases of property and equipment

 

 

(372

)

 

 

(31

)

Net cash used in investing activities

 

 

(409

)

 

 

(72

)

 

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Dividends paid

 

 

(6,946

)

 

 

(6,528

)

Tax adjustment related to restricted stock

 

 

39

 

 

 

-

 

Net cash used in financing activities

 

 

(6,907

)

 

 

(6,528

)

 

 

 

 

 

 

 

 

 

Net increase in cash and cash equivalents

 

 

16,274

 

 

 

17,758

 

Cash and cash equivalents, at beginning of period

 

 

18,305

 

 

 

18,155

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents, at end of period

 

$

34,579

 

 

$

35,913

 

 

 

 

 

 

 

 

 

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash paid for income taxes

 

$

6,058

 

 

$

5,688

 

 

 

 

 

 

 

 

 

 

Dividends payable in accrued expenses

 

$

191

 

 

$

196

 



Exhibit 99.1 Page 4 of 4