PetMed Express D/B/A 1-800-PetMeds Announces Its Second Quarter Financial Results and Its $0.18 Per Share Quarterly Dividend
October 19 2015 - 08:00AM
PetMed Express, Inc. (NASDAQ:PETS) today announced its financial
results for the quarter ended September 30, 2015. Excluding a
one-time charge for an IT-related discontinued project in the
quarter and six months ended September 30, 2014, net income for the
quarter ended September 30, 2015 was $4.5 million, or $0.22 diluted
per share, compared to net income of $3.8 million, or $0.19 diluted
per share, for the quarter ended September 30, 2014, an 18%
increase to net income, and net income for the six months ended
September 30, 2015 was $10.3 million, or $0.51 diluted per share,
compared to net income of $8.8 million, or $0.44 diluted per share,
for the six months ended September 30, 2014, a 17% increase to net
income. This one-time IT-related discontinued project cost of $1.7
million was expensed in the quarter ended September 30, 2014. The
after tax net impact of this charge was $1.1 million, or $0.05
diluted per share. Net sales for the quarter ended September 30,
2015 were $56.7 million, compared to $57.6 million for the quarter
ended September 30, 2014, a decrease of 1.5%. Net sales for the six
months ended September 30, 2015 were $128.4 million, compared to
$130.1 million for the six months ended September 30, 2014, a
decrease of 1.4%. The Company’s online sales for the quarter ended
September 30, 2015 were approximately 81% of all sales, compared to
80% for the same quarter the prior year.
Menderes Akdag, CEO and President, commented:
“Despite sales being down slightly we were able to increase both
gross profit margins and average order size during the quarter. For
the quarter ended September 30, 2015 our gross profit increased 128
basis points, which can be attributed to a shift in sales to higher
margin items. Our average order size increased to $80 for the
quarter ended September 30, 2015, compared to $75 for the same
quarter in the prior year. Excluding the one-time charge in the
quarter ended September 30, 2014, for the quarter ended September
30, 2015 our operating expenses decreased by about 79 basis points,
which can be attributed to a reduction in advertising spending. For
the remainder of Fiscal 2016 we are focusing on improving our
marketing efforts to increase sales and profitability.”
The Board of Directors declared a quarterly
dividend of $0.18 per share on the Company’s common stock. The
dividend will be payable on November 13, 2015, to shareholders of
record at the close of business on November 2, 2015. 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 19, 2015 until November 3, 2015
at 11:59 P.M. To access the replay, call (800) 688-2794 (toll free)
or (203) 369-3685 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, 2015. 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.
PETMED EXPRESS,
INC. AND SUBSIDIARIES |
CONDENSED
CONSOLIDATED BALANCE SHEETS |
(In thousands) |
|
|
|
|
|
|
|
September 30, |
|
March 31, |
|
|
|
2015 |
|
|
|
2015 |
|
|
|
(Unaudited) |
|
|
ASSETS |
|
|
|
|
|
|
|
|
|
Current
assets: |
|
|
|
|
Cash and cash equivalents |
$ |
|
42,180 |
|
$ |
|
35,613 |
|
Short term investments - available
for sale |
|
|
15,604 |
|
|
|
15,591 |
|
Accounts receivable, less allowance
for doubtful accounts of $12 and $8, respectively |
|
|
1,624 |
|
|
|
1,931 |
|
Inventories - finished goods |
|
|
24,404 |
|
|
|
25,068 |
|
Prepaid expenses and other current
assets |
|
|
1,466 |
|
|
|
1,380 |
|
Deferred tax assets |
|
|
761 |
|
|
|
817 |
|
Prepaid income taxes |
|
|
60 |
|
|
|
- |
|
Total current assets |
|
|
86,099 |
|
|
|
80,400 |
|
|
|
|
|
|
Noncurrent assets: |
|
|
|
|
Property and equipment, net |
|
|
1,367 |
|
|
|
1,569 |
|
Intangible assets |
|
|
860 |
|
|
|
860 |
|
Deferred tax assets |
|
|
74 |
|
|
|
23 |
|
|
|
|
|
|
Total
assets |
$ |
|
88,400 |
|
$ |
|
82,852 |
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
Accounts payable |
$ |
|
7,277 |
|
$ |
|
5,153 |
|
Accrued expenses and other current
liabilities |
|
|
1,879 |
|
|
|
2,214 |
|
Income taxes payable |
|
|
- |
|
|
|
50 |
|
|
|
|
|
|
Total
liabilities |
|
|
9,156 |
|
|
|
7,417 |
|
|
|
|
|
|
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; 20,331 and 20,262 shares issued and
outstanding, respectively |
|
|
20 |
|
|
|
20 |
|
Additional paid-in capital |
|
|
3,987 |
|
|
|
3,117 |
|
Retained earnings |
|
|
75,301 |
|
|
|
72,343 |
|
Accumulated other comprehensive
loss |
|
|
(73 |
) |
|
|
(54 |
) |
|
|
|
|
|
Total shareholders' equity |
|
|
79,244 |
|
|
|
75,435 |
|
|
|
|
|
|
Total
liabilities and shareholders' equity |
$ |
|
88,400 |
|
$ |
|
82,852 |
|
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, |
|
|
|
2015 |
|
|
|
2014 |
|
|
|
2015 |
|
|
2014 |
|
|
|
|
|
|
|
|
|
Sales |
$ |
|
56,725 |
|
$ |
|
57,576 |
|
$ |
|
128,359 |
|
$ |
130,117 |
Cost of
sales |
|
|
37,812 |
|
|
|
39,117 |
|
|
|
86,480 |
|
|
87,886 |
|
|
|
|
|
|
|
|
|
Gross
profit |
|
|
18,913 |
|
|
|
18,459 |
|
|
|
41,879 |
|
|
42,231 |
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
General and
administrative |
|
|
5,388 |
|
|
|
5,381 |
|
|
|
11,187 |
|
|
11,256 |
Advertising |
|
|
6,249 |
|
|
|
6,915 |
|
|
|
14,134 |
|
|
16,811 |
Discontinued project
costs |
|
|
- |
|
|
|
1,714 |
|
|
|
- |
|
|
1,714 |
Depreciation |
|
|
186 |
|
|
|
159 |
|
|
|
377 |
|
|
322 |
Total
operating expenses |
|
|
11,823 |
|
|
|
14,169 |
|
|
|
25,698 |
|
|
30,103 |
|
|
|
|
|
|
|
|
|
Income
from operations |
|
|
7,090 |
|
|
|
4,290 |
|
|
|
16,181 |
|
|
12,128 |
|
|
|
|
|
|
|
|
|
Other
income: |
|
|
|
|
|
|
|
|
Interest income, net |
|
|
55 |
|
|
|
44 |
|
|
|
105 |
|
|
88 |
Other, net |
|
|
(4 |
) |
|
|
(2 |
) |
|
|
(8 |
) |
|
7 |
Total
other income |
|
|
51 |
|
|
|
42 |
|
|
|
97 |
|
|
95 |
|
|
|
|
|
|
|
|
|
Income
before provision for income taxes |
|
|
7,141 |
|
|
|
4,332 |
|
|
|
16,278 |
|
|
12,223 |
|
|
|
|
|
|
|
|
|
Provision for income taxes |
|
|
2,639 |
|
|
|
1,600 |
|
|
|
6,019 |
|
|
4,518 |
|
|
|
|
|
|
|
|
|
Net
income |
$ |
|
4,502 |
|
$ |
|
2,732 |
|
$ |
|
10,259 |
|
$ |
7,705 |
|
|
|
|
|
|
|
|
|
Net
change in unrealized gain (loss) on short term
investments |
|
|
16 |
|
|
|
(1 |
) |
|
|
(19 |
) |
|
7 |
|
|
|
|
|
|
|
|
|
Comprehensive income |
$ |
|
4,518 |
|
$ |
|
2,731 |
|
$ |
|
10,240 |
|
$ |
7,712 |
|
|
|
|
|
|
|
|
|
Net income per common
share: |
|
|
|
|
|
|
|
|
Basic |
$ |
|
0.22 |
|
$ |
|
0.14 |
|
$ |
|
0.51 |
|
$ |
0.39 |
Diluted |
$ |
|
0.22 |
|
$ |
|
0.14 |
|
$ |
|
0.51 |
|
$ |
0.38 |
|
|
|
|
|
|
|
|
|
Weighted
average number of common shares outstanding: |
|
|
|
|
|
|
Basic |
|
|
20,126 |
|
|
|
20,016 |
|
|
|
20,100 |
|
|
19,988 |
Diluted |
|
|
20,246 |
|
|
|
20,146 |
|
|
|
20,222 |
|
|
20,119 |
|
|
|
|
|
|
|
|
|
Cash dividends declared
per common share |
$ |
|
0.18 |
|
$ |
|
0.17 |
|
$ |
|
0.36 |
|
$ |
0.34 |
PETMED EXPRESS,
INC. AND SUBSIDIARIES |
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS |
|
(In thousands)
(Unaudited) |
|
|
|
|
|
Six Months
Ended |
|
|
|
September
30, |
|
|
|
|
2015 |
|
|
|
2014 |
|
|
Cash flows from
operating activities: |
|
|
|
|
|
Net income |
$ |
|
10,259 |
|
$ |
|
7,705 |
|
|
Adjustments to reconcile net income
to net cash provided by operating activities: |
|
|
|
|
|
Depreciation |
|
|
377 |
|
|
|
322 |
|
|
Share based compensation |
|
|
777 |
|
|
|
753 |
|
|
Discontinued project
costs |
|
|
- |
|
|
|
1,714 |
|
|
Deferred income taxes |
|
|
4 |
|
|
|
237 |
|
|
Bad debt expense |
|
|
227 |
|
|
|
40 |
|
|
(Increase) decrease in operating
assets and increase (decrease) in liabilities: |
|
|
|
|
|
Accounts receivable |
|
|
81 |
|
|
|
(235 |
) |
|
Inventories - finished
goods |
|
|
664 |
|
|
|
15,192 |
|
|
Prepaid income taxes |
|
|
(60 |
) |
|
|
(1,816 |
) |
|
Prepaid expenses and other current
assets |
|
|
(86 |
) |
|
|
119 |
|
|
Accounts payable |
|
|
2,125 |
|
|
|
(521 |
) |
|
Income taxes payable |
|
|
(50 |
) |
|
|
- |
|
|
Accrued expenses and other current
liabilities |
|
|
(277 |
) |
|
|
80 |
|
|
Net cash provided by
operating activities |
|
|
14,041 |
|
|
|
23,590 |
|
|
|
|
|
|
|
|
Cash flows from
investing activities: |
|
|
|
|
|
Net change in
investments |
|
|
(33 |
) |
|
|
(37 |
) |
|
Purchases of property and
equipment |
|
|
(175 |
) |
|
|
(372 |
) |
|
Net cash used in
investing activities |
|
|
(208 |
) |
|
|
(409 |
) |
|
|
|
|
|
|
|
Cash flows from
financing activities: |
|
|
|
|
|
Dividends paid |
|
|
(7,358 |
) |
|
|
(6,946 |
) |
|
Tax adjustment related to
restricted stock |
|
|
92 |
|
|
|
39 |
|
|
Net cash used in
financing activities |
|
|
(7,266 |
) |
|
|
(6,907 |
) |
|
|
|
|
|
|
|
Net increase in cash
and cash equivalents |
|
|
6,567 |
|
|
|
16,274 |
|
|
Cash and cash
equivalents, at beginning of period |
|
|
35,613 |
|
|
|
18,305 |
|
|
|
|
|
|
|
|
Cash and cash
equivalents, at end of period |
$ |
|
42,180 |
|
$ |
|
34,579 |
|
|
|
|
|
|
|
|
Supplemental disclosure
of cash flow information: |
|
|
|
|
|
|
|
|
|
|
|
Cash paid for income
taxes |
$ |
|
6,033 |
|
$ |
|
6,058 |
|
|
|
|
|
|
|
|
Dividends payable in accrued
expenses |
$ |
|
154 |
|
$ |
|
191 |
|
|
For investment relations contact PetMed Express, Inc., Bruce S. Rosenbloom, CFO, 954-979-5995.
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