GlobeNewswire Inc | Oct 26, 2020 08:00AM EDT

October 26, 2020

Diluted EPS $0.42 vs $0.33 per shareQuarterly 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 Companys 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 Companys financial performance.

This morning at 8:30 A.M. Eastern Time, the Company will host a conference call to review the quarters 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 26, 2020 until November 9, 2020 at 11:59 P.M Eastern Time. To access the replay, call (800) 337-8653 (toll free) or (402) 220-9669, and enter passcode 5500.

Founded in 1996, PetMed Express is Americas 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 Companys 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 Managements 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 Companys 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 SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEETS(In thousands, except for per share data) September March 31, 30, 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 aliquidation 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, 20 20 respectivelyAdditional 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 SUBSIDIARIESCONDENSED 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 6,809 6,303 14,563 12,811 administrativeAdvertising 5,131 4,756 14,164 13,380 Depreciation 607 572 1,169 1,140 Total operating 12,547 11,631 29,896 27,331 expenses 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 beforeprovision for income 10,875 9,134 20,656 16,119 taxes Provision for income 2,463 2,469 4,476 4,111 taxes 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 averagenumber of common shares outstanding:Basic 20,063 19,963 20,024 20,098 Diluted 20,154 19,973 20,098 20,109 Cash dividendsdeclared per common $ 0.28 $ 0.27 $ 0.56 $ 0.54 share

PETMED EXPRESS, INC. AND SUBSIDIARIESCONDENSED 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 2,582 (5,632 )equivalentsCash 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