January 22, 2013 at 08:00 AM EST
PetMed Express D/B/A 1-800-PetMeds Announces Its Third Fiscal Quarter Financial Results

POMPANO BEACH, Fla., Jan. 22, 2013 (GLOBE NEWSWIRE) -- PetMed Express, Inc. (Nasdaq:PETS) today announced its financial results for the quarter ended December 31, 2012. Net income was $4.6 million, or $0.23 diluted per share, for the quarter ended December 31, 2012, compared to net income of $3.9 million, or $0.19 diluted per share, for the quarter ended December 31, 2011, a 19% increase to EPS. Net income was $12.6 million, or $0.63 diluted per share, for the nine months ended December 31, 2012, compared to net income of $12.7 million, or $0.61 diluted per share, for the nine months ended December 31, 2011, a 3.2% increase to EPS. Net sales for the quarter ended December 31, 2012 were $49.6 million, compared to $50.5 million for the quarter ended December 31, 2011, a decrease of 1.8%. Net sales for the nine months ended December 31, 2012 were $176.7 million, compared to $182.3 million for the nine months ended December 31, 2011, a decrease of 3.1%. Online sales increased slightly for the quarter ended December 31, 2012, with approximately 78% of all sales being generated via the Internet, compared to 77% for the same period the prior year.

Menderes Akdag, President & CEO, commented: "We were able to increase our gross margins and decrease our operating expenses to improve our bottom line results this quarter. For the quarter ending December 31, 2012 our gross profit increased by 75 basis points, this increase can be attributed to a change in our product mix to higher margin items, including generics. For the quarter ending December 31, 2012 our operating expenses decreased by 170 basis points, mainly due to a reduction in advertising spending. The advertising costs of acquiring a new customer were reduced to $35 for the quarter ended December 31, 2012, compared to $36 for the same quarter the prior year. Cash from operation for the nine months ended December 31, 2012 increased 59% to $21.8 million, compared to $13.7 million for the same period the prior year. Although sales were slightly down during the quarter ended December 31, 2012, reorder sales increased by 1.2%. The unavailability of Novartis brands, due to the manufacturer's suspended production, continued to negatively impact our sales. Looking to the future, we will continue to focus on advertising efficiency to improve new order sales and shift sales to higher margin items, including generics, while continuing to expand our product offerings."

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. Eastern Time on January 22, 2013 until February 5, 2013 at 11:59 P.M. Eastern Time. To access the replay, call (800) 839-1163 (toll free) or (402) 998-1073, 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, 2012. 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)
December 31,March 31,
20122012
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents  $ 30,018  $ 46,801
Short term investments - available for sale  15,455  10,347
Accounts receivable, less allowance for doubtful accounts of $2 and $5, respectively  744  1,572
Inventories - finished goods  18,719  26,217
Prepaid expenses and other current assets  1,578  1,241
Deferred tax assets  1,062  1,230
Prepaid income taxes  --   199
Total current assets  67,576  87,607
Property and equipment, net  2,295  2,597
Intangible asset  860  860
Total assets  $ 70,731  $ 91,064
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable  $ 5,974  $ 6,619
Accrued expenses and other current liabilities  2,194  2,772
Income taxes payable  246  -- 
Total current liabilities  8,414  9,391
Deferred tax liabilities  247  492
Total liabilities  8,661  9,883
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; 20,001 and 20,338 shares issued and outstanding, respectively  20  20
Retained earnings  62,055  81,108
Accumulated other comprehensive (loss) gain  (14)  44
Total shareholders' equity  62,070  81,181
Total liabilities and shareholders' equity  $ 70,731  $ 91,064
PETMED EXPRESS, INC. AND SUBSIDIARIES 
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME 
(In thousands, except for per share amounts) (Unaudited) 
 Three Months Ended  Nine Months Ended 
 December 31,  December 31, 
2012201120122011
Sales   $ 49,609  $ 50,523  $ 176,709  $ 182,326
Cost of sales   32,397  33,369  117,823  121,128
Gross profit   17,212  17,154  58,886  61,198
Operating expenses: 
General and administrative   5,147  5,244  16,440  16,952
Advertising   4,602  5,449  21,876  23,453
Depreciation   254  359  831  1,046
Total operating expenses   10,003  11,052  39,147  41,451
Income from operations   7,209  6,102  19,739  19,747
Other income: 
Interest income, net   141  70  264  228
Other, net   (3)  (1)  (3)  62
Total other income   138  69  261  290
Income before provision for income taxes   7,347  6,171  20,000  20,037
Provision for income taxes   2,770  2,273  7,437  7,372
Net income   $ 4,577  $ 3,898  $ 12,563  $ 12,665
Net income per common share: 
Basic   $ 0.23  $ 0.19  $ 0.63  $ 0.61
Diluted   $ 0.23  $ 0.19  $ 0.63  $ 0.61
Weighted average number of common shares outstanding: 
Basic   19,808  20,082  19,963  20,788
Diluted   19,923  20,180  20,077  20,886
Comprehensive income   $ 4,494  $ 3,907  $ 12,505  $ 12,816
Cash dividends declared per common share   $ 1.150  $ 0.125  $ 1.450  $ 0.375
PETMED EXPRESS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands) (Unaudited) 
Nine Months Ended 
December 31, 
20122011
Cash flows from operating activities: 
Net income   $ 12,563  $ 12,665
Adjustments to reconcile net income to net cash provided by operating activities: 
Depreciation   831  1,046
Share based compensation   1,496  1,686
Deferred income taxes   (77)  (175)
Bad debt expense   37  40
(Increase) decrease in operating assets and increase (decrease) in liabilities: 
Accounts receivable   791  306
Inventories - finished goods   7,498  (806)
Prepaid income taxes   199  562
Prepaid expenses and other current assets   (337)  (977)
Accounts payable   (645)  (182)
Accrued expenses and other current liabilities   (761)  (443)
Income taxes payable   246  -- 
Net cash provided by operating activities   21,841  13,722
Cash flows from investing activities: 
Net change in investments   (5,166)  10,877
Purchases of property and equipment   (529)  (624)
Net cash (used in) provided by investing activities   (5,695)  10,253
Cash flows from financing activities: 
Dividends paid   (28,896)  (7,914)
Purchases of treasury stock   (3,865)  (23,685)
Tax adjustment related to restricted stock   (168)  (71)
Net cash used in financing activities   (32,929)  (31,670)
Net decrease in cash and cash equivalents   (16,783)  (7,695)
Cash and cash equivalents, at beginning of period   46,801  49,660
Cash and cash equivalents, at end of period   $ 30,018  $ 41,965
Supplemental disclosure of cash flow information: 
Cash paid for income taxes   $ 7,237  $ 7,056
Dividends payable in accrued expenses   $ 351  $ 167
CONTACT: For investment relations contact PetMed Express, Inc.,
         Bruce S. Rosenbloom, CFO, 954-979-5995
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