GlobeNewswire Inc | Jul 26, 2021 08:00AM EDT

July 26, 2021

DELRAY BEACH, Fla., July 26, 2021 (GLOBE NEWSWIRE) -- PetMed Express, Inc. (NASDAQ: PETS) today announced its financial results for its first quarter ended June 30, 2021. Net sales for the quarter ended June 30, 2021 were $79.3 million, compared to $96.2 million for the quarter ended June 30, 2020, but relatively flat versus the quarter ended June 30, 2019, prior to the pandemic. Net income for the quarter ended June 30, 2021 was $4.4 million, or $0.22 diluted per share, compared to net income of $7.8 million, or $0.39 diluted per share, for the same quarter the prior year, and $5.3 million or $0.26 for the quarter ended June 30, 2019. During the quarter ended June 30, 2021 there were one-time charges of $717,000 related to the CEOs separation agreement. The Company also incurred an additional cost of $260,000 related to brand and marketing consulting fees.

Mendo Akdag, the Companys CEO, commented: In our first quarter of FY 2022, we faced a unique situation. We were coming off a very strong quarter the previous year that was primarily driven by increased online buying as a result of the pandemic causing many stores to close and many vets to be unavailable. As a result, in the first quarter of FY 2021 consumers increasingly relied on ecommerce. However, during the most recent quarter while the pandemic was abating and stores were re-opening, the advertising market was rapidly recovering with demand driving up ad prices dramatically. As a result, our advertising spending delivered fewer ad impressions than in prior years. Because of this, we believe our advertising spending was less effective in the most recent quarter in its ability to attract new customers. Ad prices may revert back to more normal levels as the pandemic further subsides which may increase the efficiency and effectiveness of our media spending and thereby continue to help us gain new customers.

Mr. Akdag added, "In addition, during the most recent quarter there was a dramatic increase in veterinary visits by consumers who were unable to visit their veterinarians during the pandemic. We believe the increase in veterinary visits was primarily due to pet owners needing to visit their veterinarians for their pets annual exam and to renew their prescriptions. Since some pet owners purchase medications directly from their vets during their veterinary visit, the Company believes this negatively impacted its sales during the quarter. We would expect to see stronger reorder sales in the back half of FY 2022, as we anticipate more prescriptions being renewed."

Gian Fulgoni, Chairman of the Board of Directors, commented: We are excited about the Companys future. We are already a leader in the online pet medication market, which has a tremendous long term growth opportunity as pet owners continue to shift their purchases to ecommerce. The Company is in a very strong financial position, with over $111 million in cash and cash equivalents and no debt. We have two new board members on the slate for the annual shareholders meeting this week, who each bring deep ecommerce and marketing experience to the board, and we are well underway with our search for a new CEO. Going forward, we anticipate that the introduction of new media strategies and value-added services will successfully broaden our customer base. We will also continue investing in our ecommerce platform to better service our customers by adding additional features to our website to further drive sales, like AutoShip & Save, which was launched on our ecommerce platform last week. Our customers responded very positively and enrollment in AutoShip & Save was strong in this first week. We anticipate many more of our reorder sales will transition to AutoShip & Save by the end of our fiscal year.

Finally, the Company would like to acknowledge its current CEO Mendo Akdag, who will be leaving the Company on July 30, 2021. The Company is very appreciative of Mendos leadership, vision, and dedication over the past 20 years, and wishes him the best in his future endeavors.

The Board of Directors declared a quarterly dividend of $0.30 per share on the Companys common stock. The dividend will be payable on August 13, 2021, to shareholders of record at the close of business on August 6, 2021. 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 quarter-end financial results. To access the call, which is open to the public, dial (888) 455-1758 (toll free) or (203) 827-7025. Please call in ten minutes prior to the scheduled start time. 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. Eastern Time on July 26, 2021 until August 9, 2021 at 11:59 P.M. Eastern Time. To access the replay, call (866) 360-7718 (toll free) or (203) 369-0170 and enter passcode 5500.

Founded in 1996, PetMed Express is Americas 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.petmeds.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, 2021. 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 amounts) June 30, March 31, 2021 2021 ASSETS (UNAUDITED) Current assets: Cash and cash equivalents $ 111,786 $ 118,718Accounts receivable, less allowance for doubtful 2,162 2,587accounts of $33 and $39, respectivelyInventories - finished goods 29,174 34,420Prepaid expenses and other current assets 4,061 4,503Prepaid income taxes - 959Total current assets 147,183 161,187 Noncurrent assets: Property and equipment, net 25,280 25,450Intangible assets 860 860Total noncurrent assets 26,140 26,310 Total assets $ 173,323 $ 187,497 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 24,714 $ 39,548Accrued expenses and other current liabilities 6,579 5,387Income taxes payable 569 -Total current liabilities 31,862 44,935 Deferred tax liabilities 1,114 1,281 Total liabilities 32,976 46,216 Commitments and contingencies Shareholders' equity: Preferred stock, $.001 par value, 5,000 sharesauthorized;3 convertible shares issued and 9 9outstanding with a liquidation preference of $4 pershareCommon stock, $.001 par value, 40,000 sharesauthorized; 20,270 and 20,269 shares issued and 20 20outstanding, respectivelyAdditional paid-in capital 7,829 7,111Retained earnings 132,489 134,141 Total shareholders' equity 140,347 141,281 Total liabilities and shareholders' equity $ 173,323 $ 187,497

PETMED EXPRESS, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF INCOME(In thousands, except for per share amounts) (Unaudited)

Three Months Ended June 30, 2021 2020 Sales $ 79,312 $ 96,204Cost of sales 57,532 69,419 Gross profit 21,780 26,785 Operating expenses: General and administrative 8,041 7,754Advertising 7,673 9,033Depreciation 647 562Total operating expenses 16,361 17,349 Income from operations 5,419 9,436 Other income: Interest income, net 85 90Other, net 284 255Total other income 369 345 Income before provision for income taxes 5,788 9,781 Provision for income taxes 1,360 2,013 Net income $ 4,428 $ 7,768 Net income per common share: Basic $ 0.22 $ 0.39Diluted $ 0.22 $ 0.39 Weighted average number of common shares outstanding: Basic 20,109 19,984Diluted 20,200 20,042 Cash dividends declared per common share $ 0.30 $ 0.28

PETMED EXPRESS, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(In thousands) (Unaudited) Three Months Ended June 30, 2021 2020 Cash flows from operating activities: Net income $ 4,428 $ 7,768 Adjustments to reconcile net income to net cash provided by operating activities:Depreciation 647 562 Share based compensation 718 740 Deferred income taxes (167 ) (255 )Bad debt expense 29 33 (Increase) decrease in operating assets and increase (decrease) in liabilities:Accounts receivable 396 1,100 Inventories - finished goods 5,246 (25,187 )Prepaid income taxes 959 - Prepaid expenses and other current assets 442 (737 )Accounts payable (14,834 ) 1,317 Accrued expenses and other current liabilities 1,145 903 Income taxes payable 569 2,554 Net cash used in operating activities (422 ) (11,202 ) Cash flows from investing activities: Purchases of property and equipment (477 ) (145 )Net cash used in investing activities (477 ) (145 ) Cash flows from financing activities: Dividends paid (6,033 ) (5,594 )Net cash used in financing activities (6,033 ) (5,594 ) Net decrease in cash and cash equivalents (6,932 ) (16,941 ) Cash and cash equivalents, at beginning of year 118,718 103,762 Cash and cash equivalents, at end of year $ 111,786 $ 86,821 Supplemental disclosure of cash flow information: Dividends payable in accrued expenses $ 245 $ 297