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 PetMed Express, Inc. D/B/A 1-800-PETMEDS Announces Its Financial Results for Fiscal 2017 and Its Quarterly Dividend Raised to $0.20 Per Share
   Monday, May 08, 2017 8:01:13 AM ET

Fourth Quarter Net Income Increased 38%

Fourth Quarter New Order Sales Increased 17%

Fourth Quarter Net Sales Increased 14%

PetMed Express, Inc. (PETS ) today announced its financial results for the fiscal year ended March 31, 2017. Net sales for the quarter ended March 31, 2017 were $63.0 million, compared to $55.4 million for the quarter ended March 31, 2016, an increase of 14%. For the fiscal year ended March 31, 2017 net sales were $249.2 million, compared to $234.7 million for the fiscal year ended March 31, 2016, an increase of 6.2%. The increase in sales for the quarter ended March 31, 2017 can be attributed to a 17% increase in new order sales, and a 13% increase in reorder sales. Net income for the quarter ended March 31, 2017 was $7.5 million, or $0.37 diluted per share, compared to net income of $5.4 million, or $0.27 diluted per share, for the same quarter the prior year, an increase to net income of 38%. Net income for the fiscal year ended March 31, 2017 was $23.8 million, or $1.17 diluted per share, compared to net income of $20.6 million, or $1.02 diluted per share, for the fiscal year ended March 31, 2016, an increase to net income of 16%. The Company’s online sales for the quarter ended March 31, 2017 were approximately 83% of all sales, compared to 82% for the same quarter the prior year.

Menderes Akdag, President and CEO, commented: "We were encouraged with increases in both new order and reorder sales during the quarter, along with an accelerated increase to net income. This increase to net income can be attributed to increased gross profit margins in the March quarter. Gross profit as a percentage of sales increased to 35.1% for the quarter ended March 31, 2017, compared to 31.9% for the quarter ended March 31, 2016. The increase to gross profit margin can be attributed to a product mix shift to higher margin items. During the March quarter we acquired approximately 126,000 new customers, compared to 116,000 new customers acquired in the same quarter the prior year. Average order value was $86 for the March quarter compared to $83 for the same quarter the prior year. Cash flow from operations was $47.2 million for the fiscal year ended March 31, 2017, compared to $21.1 million for the fiscal year ended March 31, 2016, with the majority of the increase due to an increase in accounts payable balance and a reduction in inventory, in addition to an increase in net income. In fiscal 2018, we will look to build on past successes by focusing on continuing to increase sales and improve our service levels."

The Board of Directors declared an increased quarterly dividend of $0.20 per share on its common stock. The dividend will be payable on May 26, 2017, to shareholders of record at the close of business on May 19, 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 year-end financial results. To access the call which is open to the public, 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. Eastern Time on May 8, 2017 until May 22, 2017 at 11:59 P.M. To access the replay, call (800) 793-2386 (toll free) or (402) 280-1611 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, 2016. 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
CONSOLIDATED BALANCE SHEETS
(In thousands)
                                                                                                                                                     March 31,      March 31,
                                                                                                                                                     2017           2016
ASSETS
Current assets:
Cash and cash equivalents                                                                                                                            $     58,730   $     37,639
Accounts receivable, less allowance for doubtful accounts of $27 and $13, respectively                                                                     1,808          1,724
Inventories - finished goods                                                                                                                               20,228         25,586
Prepaid expenses and other current assets                                                                                                                  1,019          2,435
Prepaid income taxes                                                                                                                                       -              243
Total current assets                                                                                                                                       81,785         67,627
Noncurrent assets:
Property and equipment, net                                                                                                                                30,164         20,929
Intangible assets                                                                                                                                          860            860
Deferred tax assets                                                                                                                                        -              863
Total noncurrent assets                                                                                                                                    31,024         22,652
Total assets                                                                                                                                         $     112,809  $     90,279
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable                                                                                                                                     $     15,221   $     5,004
Accrued expenses and other current liabilities                                                                                                             2,475          2,080
Income taxes payable                                                                                                                                       659            -
Total current liabilities                                                                                                                                  18,355         7,084
Deferred tax liabilities                                                                                                                                   1,088          -
Total liabilities                                                                                                                                          19,443         7,084
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; 20,526 and 20,447 shares issued and outstanding, respectively                                     21             20
Additional paid-in capital                                                                                                                                 6,806          4,871
Retained earnings                                                                                                                                          86,530         78,295
Total shareholders’ equity                                                                                                                                 93,366         83,195
Total liabilities and shareholders’ equity                                                                                                           $     112,809  $     90,279
PETMED EXPRESS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands, except for per share amount)
                                                                 Three Months Ended          Year Ended
                                                                 March 31,                   March 31,
                                                                 2017        2016            2017         2016
                                                                 (UNAUDITED)
Sales                                                            $   63,032  $   55,392      $   249,176  $   234,684
Cost of sales                                                        40,877      37,729          169,862      158,388
Gross profit                                                         22,155      17,663          79,314       76,296
Operating expenses:
General and administrative                                           5,593       5,137           22,799       21,301
Advertising                                                          4,351       3,715           17,663       21,837
Depreciation                                                         514         226             1,369        770
Total operating expenses                                             10,458      9,078           41,831       43,908
Income from operations                                               11,697      8,585           37,483       32,388
Other income (expense):
Interest income, net                                                 45          30              141          190
Realized loss on sale of short term investments                      -           (74    )        -            (74     )
Other, net                                                           94          75              300          63
Total other income                                                   139         31              441          179
Income before provision for income taxes                             11,836      8,616           37,924       32,567
Provision for income taxes                                           4,333       3,198           14,105       12,000
Net income                                                       $   7,503   $   5,418       $   23,819   $   20,567
Net change in unrealized gain on short and long term investments     -           87              -            54
Comprehensive income                                             $   7,503   $   5,505       $   23,819   $   20,621
Net income per common share:
Basic                                                            $   0.37    $   0.27        $   1.18     $   1.02
Diluted                                                          $   0.37    $   0.27        $   1.17     $   1.02
Weighted average number of common shares outstanding:
Basic                                                                20,260      20,152          20,232       20,124
Diluted                                                              20,392      20,322          20,378       20,254
Cash dividends declared per common share                         $   0.19    $   0.18        $   0.76     $   0.72
PETMED EXPRESS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
                                                                                   Year Ended
                                                                                   March 31,
                                                                                   2017               2016
Cash flows from operating activities:
Net income                                                                         $    23,819        $    20,567
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation                                                                            1,369              770
Share based compensation                                                                1,935              1,612
Deferred income taxes                                                                   1,951              (23     )
Bad debt expense                                                                        421                260
(Increase) decrease in operating assets and increase (decrease) in liabilities:
Accounts receivable                                                                     (505    )          (53     )
Inventories - finished goods                                                            5,358              (518    )
Prepaid income taxes                                                                    243                (243    )
Prepaid expenses and other current assets                                               1,416              (1,055  )
Accounts payable                                                                        10,217             (149    )
Accrued expenses and other current liabilities                                          321                (65     )
Income taxes payable                                                                    659                (50     )
Net cash provided by operating activities                                               47,204             21,053
Cash flows from investing activities:
Proceeds from the sale of short term investments                                        -                  15,591
Net change in investments                                                               -                  54
Purchases of property and equipment                                                     (10,604 )          (20,130 )
Net cash used in investing activities                                                   (10,604 )          (4,485  )
Cash flows from financing activities:
Dividends paid                                                                          (15,509 )          (14,684 )
Excess tax benefit related to stock compensation                                        -                  142
Net cash used in financing activities                                                   (15,509 )          (14,542 )
Net increase in cash and cash equivalents                                               21,091             2,026
Cash and cash equivalents, at beginning of year                                         37,639             35,613
Cash and cash equivalents, at end of year                                          $    58,730        $    37,639
Supplemental disclosure of cash flow information:
Cash paid for income taxes                                                         $    11,373        $    12,173
Dividends payable in accrued expenses                                              $    217           $    143
For investment relations contact PetMed Express, Inc., Bruce S. Rosenbloom, CFO, 561-526-4444

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