PetMed Express D/B/A 1-800-Petmeds Announces Record Second Quarter Financial Results
October 23 2017 - 8:00AM
Second Quarter Net
Income Increased 79%Second Quarter Sales Increased
10%Second Quarter Online Sales Increased
12%
PetMed Express, Inc. (NASDAQ:PETS) today announced its financial
results for the quarter ended September 30, 2017. Net income
was $8.8 million, or $0.43 diluted per share, for the quarter ended
September 30, 2017, compared to net income of $4.9 million, or
$0.24 diluted per share, for the quarter ended September 30, 2016,
a 79% increase to net income. Net income for the six months
ended September 30, 2017 was $18.0 million, or $0.88 diluted per
share, compared to net income of $11.5 million, or $0.56 diluted
per share, for the six months ended September 30, 2016, a 57%
increase to net income. Net sales for the quarter ended September
30, 2017 were $66.7 million, compared to $60.8 million for the
quarter ended September 30, 2016, an increase of 10%. Net
sales for the six months ended September 30, 2017 were $146.4
million, compared to $133.3 million for the six months ended
September 30, 2016, an increase of 10%. New order sales increased
9%, to $11.6 million for the quarter ended September 30, 2017,
compared to $10.7 million for the same quarter in the prior
year. The Company’s online sales for the quarter ended
September 30, 2017 were approximately 84% of all sales compared to
82% for the same quarter the prior year, with online sales
increasing 12%.
Menderes Akdag, CEO and President, commented:
“The trend we have seen in the last two quarters continued with
increases in both new order and reorder sales during the quarter,
along with an accelerated increase to net income for the third
consecutive quarter. This increase to net income can be
attributed to increased revenue with a shift in sales to higher
margin items in the flea, tick and heartworm categories.
Gross profit as a percentage of sales increased to 35.2% for the
quarter ended September 30, 2017, compared to 29.7% for the quarter
ended September 30, 2016. Also, an income tax benefit of
approximately $807,000 related to stock-based compensation was
recognized in the quarter ended September 30, 2017.
Average order value increased to $85 for the quarter compared
to $82 for the same quarter the prior year. For the remainder
of fiscal 2018 we will continue to focus on increasing sales and
improving our service levels.”
The Board of Directors declared a quarterly
dividend of $0.20 per share on the Company’s common stock.
The dividend will be payable on November 17, 2017, to shareholders
of record at the close of business on November 6, 2017. 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 23, 2017 until
November 6, 2017 at 10:59 P.M. To access the replay, call
(800) 839-2239 (toll free) or (203) 369-3108, 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, 2017. 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, |
|
|
2017 |
|
2017 |
ASSETS |
|
(Unaudited) |
|
|
|
|
|
|
|
Current
assets: |
|
|
|
|
Cash and
cash equivalents |
$ |
68,443 |
$ |
58,730 |
Accounts
receivable, less allowance for doubtful |
|
|
|
|
accounts
of $31 and $27, respectively |
|
2,012 |
|
1,808 |
Inventories - finished goods |
|
23,005 |
|
20,228 |
Prepaid
expenses and other current assets |
|
1,106 |
|
1,019 |
Total
current assets |
|
94,566 |
|
81,785 |
|
|
|
|
|
Noncurrent assets: |
|
|
|
|
Property
and equipment, net |
|
29,456 |
|
30,164 |
Intangible assets |
|
860 |
|
860 |
Total
noncurrent assets |
|
30,316 |
|
31,024 |
|
|
|
|
|
Total
assets |
$ |
124,882 |
$ |
112,809 |
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
Accounts
payable |
$ |
10,376 |
$ |
15,221 |
Accrued
expenses and other current liabilities |
|
2,871 |
|
2,475 |
Income
taxes payable |
|
6,008 |
|
659 |
Total
current liabilities |
|
19,255 |
|
18,355 |
|
|
|
|
|
Deferred
tax liabilities |
|
1,304 |
|
1,088 |
|
|
|
|
|
Total
liabilities |
|
20,559 |
|
19,443 |
|
|
|
|
|
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; |
|
|
|
|
20,604
and 20,526 shares issued and outstanding, respectively |
|
21 |
|
21 |
Additional paid-in capital |
|
7,952 |
|
6,806 |
Retained
earnings |
|
96,341 |
|
86,530 |
|
|
|
|
|
Total
shareholders' equity |
|
104,323 |
|
93,366 |
|
|
|
|
|
Total
liabilities and shareholders' equity |
$ |
124,882 |
$ |
112,809 |
|
|
|
|
|
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, |
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
|
|
|
|
|
|
|
|
Sales |
$ |
66,711 |
$ |
60,791 |
$ |
146,368 |
$ |
133,278 |
Cost of
sales |
|
43,232 |
|
42,727 |
|
95,424 |
|
92,762 |
|
|
|
|
|
|
|
|
|
Gross
profit |
|
23,479 |
|
18,064 |
|
50,944 |
|
40,516 |
|
|
|
|
|
|
|
|
|
Operating
expenses: |
|
|
|
|
|
|
|
|
General and administrative |
|
6,178 |
|
5,747 |
|
12,404 |
|
11,845 |
Advertising |
|
4,526 |
|
4,382 |
|
10,818 |
|
10,142 |
Depreciation |
|
527 |
|
204 |
|
1,058 |
|
398 |
Total
operating expenses |
|
11,231 |
|
10,333 |
|
24,280 |
|
22,385 |
|
|
|
|
|
|
|
|
|
Income
from operations |
|
12,248 |
|
7,731 |
|
26,664 |
|
18,131 |
|
|
|
|
|
|
|
|
|
Other
income: |
|
|
|
|
|
|
|
|
Interest
income, net |
|
143 |
|
32 |
|
226 |
|
60 |
Other,
net |
|
249 |
|
23 |
|
490 |
|
76 |
Total
other income |
|
392 |
|
55 |
|
716 |
|
136 |
|
|
|
|
|
|
|
|
|
Income
before provision for income taxes |
|
12,640 |
|
7,786 |
|
27,380 |
|
18,267 |
|
|
|
|
|
|
|
|
|
Provision
for income taxes |
|
3,880 |
|
2,887 |
|
9,344 |
|
6,774 |
|
|
|
|
|
|
|
|
|
Net
income |
$ |
8,760 |
$ |
4,899 |
$ |
18,036 |
$ |
11,493 |
|
|
|
|
|
|
|
|
|
Comprehensive income |
$ |
8,760 |
$ |
4,899 |
$ |
18,036 |
$ |
11,493 |
|
|
|
|
|
|
|
|
|
Net
income per common share: |
|
|
|
|
|
|
|
|
Basic |
$ |
0.43 |
$ |
0.24 |
$ |
0.89 |
$ |
0.57 |
Diluted |
$ |
0.43 |
$ |
0.24 |
$ |
0.88 |
$ |
0.56 |
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding: |
|
|
|
|
|
|
Basic |
|
20,349 |
|
20,234 |
|
20,321 |
|
20,208 |
Diluted |
|
20,437 |
|
20,377 |
|
20,442 |
|
20,355 |
|
|
|
|
|
|
|
|
|
Cash
dividends declared per common share |
$ |
0.20 |
$ |
0.19 |
$ |
0.40 |
$ |
0.38 |
|
|
|
|
|
|
|
|
|
PETMED EXPRESS, INC. AND
SUBSIDIARIES |
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS |
|
(In thousands)
(Unaudited) |
|
|
|
|
|
Six Months
Ended |
|
|
|
September
30, |
|
|
|
2017 |
|
2016 |
|
Cash flows from
operating activities: |
|
|
|
|
|
Net
income |
$ |
18,036 |
|
$ |
11,493 |
|
|
Adjustments to reconcile net income to net cash |
|
|
|
|
|
provided by operating activities: |
|
|
|
|
|
Depreciation |
|
1,058 |
|
|
398 |
|
|
Share
based compensation |
|
1,146 |
|
|
946 |
|
|
Deferred
income taxes |
|
216 |
|
|
364 |
|
|
Bad debt
expense |
|
46 |
|
|
352 |
|
|
(Increase) decrease in operating assets |
|
|
|
|
|
and
increase (decrease) in liabilities: |
|
|
|
|
|
Accounts
receivable |
|
(250 |
) |
|
3 |
|
|
Inventories - finished goods |
|
(2,777 |
) |
|
10,765 |
|
|
Prepaid
income taxes |
|
- |
|
|
222 |
|
|
Prepaid
expenses and other current assets |
|
(87 |
) |
|
1,764 |
|
|
Accounts
payable |
|
(4,845 |
) |
|
1,143 |
|
|
Income
taxes payable |
|
5,349 |
|
|
- |
|
|
Accrued
expenses and other current liabilities |
|
411 |
|
|
335 |
|
|
Net cash provided by
operating activities |
|
18,303 |
|
|
27,785 |
|
|
|
|
|
|
|
|
Cash flows from
investing activities: |
|
|
|
|
|
Purchases
of property and equipment |
|
(350 |
) |
|
(5,859 |
) |
|
Net cash used in
investing activities |
|
(350 |
) |
|
(5,859 |
) |
|
|
|
|
|
|
|
Cash flows from
financing activities: |
|
|
|
|
|
Dividends
paid |
|
(8,240 |
) |
|
(7,784 |
) |
|
Excess
tax benefits related to restricted stock |
|
- |
|
|
115 |
|
|
Net cash used in
financing activities |
|
(8,240 |
) |
|
(7,669 |
) |
|
|
|
|
|
|
|
Net increase in cash
and cash equivalents |
|
9,713 |
|
|
14,257 |
|
|
Cash and cash
equivalents, at beginning of period |
|
58,730 |
|
|
37,639 |
|
|
|
|
|
|
|
|
Cash and cash
equivalents, at end of period |
$ |
68,443 |
|
$ |
51,896 |
|
|
|
|
|
|
|
|
Supplemental disclosure
of cash flow information: |
|
|
|
|
|
|
|
|
|
|
|
Cash paid
for income taxes |
$ |
3,780 |
|
$ |
6,186 |
|
|
|
|
|
|
|
|
Prepaid
property and equipment in current assets |
$ |
- |
|
$ |
5,815 |
|
|
|
|
|
|
|
|
Dividends
payable in accrued expenses |
$ |
202 |
|
$ |
144 |
|
|
|
|
|
|
|
|
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