PETMED EXPRESS, INC.

(PETS)
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PetMed Express : PetMeds® Announces Its Third Fiscal Quarter Financial Results and Its Quarterly - Form 8-K

01/25/2022 | 03:28pm EDT

PetMeds® Announces Its Third Fiscal Quarter Financial Results and Its Quarterly

Dividend of $0.30 Per Share

Delray Beach, Florida, January 24, 2022, PetMed Express, Inc. (NASDAQ: PETS) today announced its financial results for the quarter ended December 31, 2021. Net sales for the quarter ended December 31, 2021, were $60.7 million, compared to $65.9 million for the quarter ended December 31, 2020, a decrease of 7.9%. Net sales for the nine months ended December 31, 2021, were $207.4 million, compared to $237.5 million for the nine months ended December 31, 2020, a decrease of 12.7%. Net income was $4.3 million, or $0.21 diluted per share, for the quarter ended December 31, 2021, compared to net income of $7.6 million, or $0.38 diluted per share, for the quarter ended December 31, 2020, a 44% decrease to net income. Net income was $15.0 million, or $0.74 diluted per share, for the nine months ended December 31, 2021, compared to net income of $23.8 million, or $1.18 diluted per share, for the nine months ended December 31, 2020, a 37% decrease to net income. Adjusted EBITDA (1) was $7.6 million, or $0.37 diluted per share, for the quarter ended December 31, 2021, compared to adjusted EBITDA of $11.0 million, or $0.55 diluted per share, for the quarter ended December 31, 2020, a 31% decrease to adjusted EBITDA. Adjusted EBITDA was $24.5 million, or $1.20 diluted per share, for the nine months ended December 31, 2021, compared to adjusted EBITDA of $34.2 million, or $1.70 diluted per share, for the nine months ended December 31, 2020, a 28% decrease to adjusted EBITDA. Our average order size increased from $88 to $89 for the quarters ended December 31, 2020 and 2021, respectively.

"We are executing rapidly against our business transformation of PetMeds across people, process, and product," said Matt Hulett, CEO and President. "The future of PetMeds is much broader than just a prescription eCommerce company and we expect to show progress in the coming quarters as we develop into a broader expert health and wellness offering."

The Board of Directors declared a quarterly dividend of $0.30 per share on the Company's common stock. The dividend will be payable on February 18, 2022, to shareholders of record at the close of business on February 7, 2022. 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 afternoon at 4:30 P.M. Eastern Time, the Company will host a conference call to review the quarter's financial results. To access the call, which is open to the public, please dial (877) 407-0789 (toll free) or (201) 689-8562. We will also provide a link at https://www.1800petmeds.com/investor.html for those who wish to stream the call via webcast. For those unable to participate in the live event, the call will be available for replay from 7:30 P.M. Eastern Time on January 24, 2022, until February 7, 2022, at 11:59 P.M Eastern Time. To access the replay, call (844) 512-2921 (toll free) or (412) 317-6671 and enter passcode 13726200.

Founded in 1996, PetMed Express is America's 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 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, 2021. 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, investor@petmeds.com.

For media relations contact Butin PR, Mary Eva Tredway, maryeva@Butinpr.com.

(1)

Adjusted EBITDA and adjusted EBITDA per share are non-GAAP financial measures. See "Non-GAAP Financial Measures" for additional information on non-GAAP financial measures and a reconciliation to the most comparable GAAP measures

###

Exhibit 99.1 Page 1 of 6

PETMED EXPRESS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except for per share data)

December 31,

March 31,

2021

2021

(Unaudited)

ASSETS

Current assets:

Cash and cash equivalents

$ 108,911 $ 118,718

Accounts receivable, less allowance for doubtful accounts of $19 and $39, respectively

1,267 2,587

Inventories - finished goods

27,640 34,420

Prepaid expenses and other current assets

3,216 4,503

Prepaid income taxes

1,870 959

Total current assets

142,904 161,187

Noncurrent assets:

Property and equipment, net

24,665 25,450

Intangible assets

860 860

Total noncurrent assets

25,525 26,310

Total assets

$ 168,429 $ 187,497

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

Accounts payable

$ 21,935 $ 39,548

Accrued expenses and other current liabilities

4,330 5,387

Total current liabilities

26,265 44,935

Deferred tax liabilities

1,262 1,281

Total liabilities

27,527 46,216

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; 20,957 and 20,269 shares issued and outstanding, respectively

21 20

Additional paid-in capital

10,151 7,111

Retained earnings

130,721 134,141

Total shareholders' equity

140,902 141,281

Total liabilities and shareholders' equity

$ 168,429 $ 187,497
Exhibit 99.1 Page 2 of 6

PETMED EXPRESS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except for per share amounts) (Unaudited)

Three Months Ended

Nine Months Ended

December 31,

December 31,

2021

2020

2021

2020

Sales

$ 60,717 $ 65,896 $ 207,415 $ 237,536

Cost of sales

42,992 46,273 148,736 168,110

Gross profit

17,725 19,623 58,679 69,426

Operating expenses:

General and administrative

7,541 6,487 22,540 21,050

Advertising

4,327 3,221 15,435 17,385

Depreciation

710 622 2,051 1,791

Total operating expenses

12,578 10,330 40,026 40,226

Income from operations

5,147 9,293 18,653 29,200

Other income:

Interest income, net

84 73 243 229

Other, net

287 345 741 938

Total other income

371 418 984 1,167

Income before provision for income taxes

5,518 9,711 19,637 30,367

Provision for income taxes

1,261 2,100 4,603 6,576

Net income

$ 4,257 $ 7,611 $ 15,034 $ 23,791

Net income per common share:

Basic

$ 0.21 $ 0.38 $ 0.75 $ 1.19

Diluted

$ 0.21 $ 0.38 $ 0.74 $ 1.18

Weighted average number of common shares outstanding:

Basic

20,208 20,094 20,165 20,047

Diluted

20,329 20,104 20,365 20,100

Cash dividends declared per common share

$ 0.30 $ 0.28 $ 0.90 $ 0.84
Exhibit 99.1 Page 3 of 6

PETMED EXPRESS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands) (Unaudited)

Nine Months Ended

December 31,

2021

2020

Cash flows from operating activities:

Net income

$ 15,034 $ 23,791

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation

2,051 1,791

Share based compensation

3,040 2,294

Deferred income taxes

(19 ) 353

Bad debt expense

104 84

(Increase) decrease in operating assets and increase (decrease) in liabilities:

Accounts receivable

1,216 1,928

Inventories - finished goods

6,780 (10,281 )

Prepaid income taxes

(911 ) -

Prepaid expenses and other current assets

1,287 (983 )

Accounts payable

(17,613 ) 2,211

Accrued expenses and other current liabilities

(1,188 ) 286

Income taxes payable

- 152

Net cash provided by operating activities

9,781 21,626

Cash flows from investing activities:

Purchases of property and equipment

(1,266 ) (1,848 )

Net cash used in investing activities

(1,266 ) (1,848 )

Cash flows from financing activities:

Dividends paid

(18,322 ) (17,039 )

Net cash used in financing activities

(18,322 ) (17,039 )

Net (decrease) increase in cash and cash equivalents

(9,807 ) 2,739

Cash and cash equivalents, at beginning of period

118,718 103,762

Cash and cash equivalents, at end of period

$ 108,911 $ 106,501

Supplemental disclosure of cash flow information:

Cash paid for income taxes

$ 5,580 $ 6,356

Dividends payable in accrued expenses

$ 329 $ 174
Exhibit 99.1 Page 4 of 6

Non-GAAP Financial Measures

To provide investors with additional information regarding our financial results, we have disclosed here and elsewhere in this earnings release adjusted EBITDA and adjusted EBITDA per share, non-GAAP financial measures that we calculate as net income excluding; share-based compensation expense; depreciation and amortization; income tax provision; and interest income (expense). We have provided reconciliations below of adjusted EBITDA to net income and adjusted EBITDA per share to diluted earnings per share, the most directly comparable GAAP financial measures.

We have included adjusted EBITDA and adjusted EBITDA per share in this earnings release because they are key measures used by our management and board of directors to evaluate our operating performance, generate future operating plans and make strategic decisions regarding the allocation of capital. In particular, the exclusion of certain expenses in calculating adjusted EBITDA facilitates operating performance comparability across reporting periods by removing the effect of non-cash expenses. Accordingly, we believe that adjusted EBITDA and adjusted EBITDA per share provide useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and board of directors.

We believe it is useful to exclude non-cash charges, such as, share-based compensation expense and depreciation and amortization from our adjusted EBITDA and adjusted EBITDA per share because the amount of such expenses in any specific period may not directly correlate to the underlying performance of our business operations. We believe it is useful to exclude income tax provision; interest income (expense) which are not components of our core business operations. Adjusted EBITDA and adjusted EBITDA per share has limitations as financial measures, and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are:

Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future and adjusted EBITDA and adjusted EBITDA per share does not reflect capital expenditure requirements for such replacements or for new capital expenditures;

Adjusted EBITDA and adjusted EBITDA per share does not reflect share-based compensation. Share-based compensation has been, and will continue to be for the foreseeable future, a material recurring expense in our business and an important part of our compensation strategy;

Adjusted EBITDA and adjusted EBITDA per share does not reflect interest income (expense), net; or changes in, or cash requirements for, our working capital; and

Other companies, including companies in our industry, may calculate adjusted EBITDA and adjusted EBITDA per share differently, which reduces its usefulness as a comparative measure.

Because of these limitations, you should consider adjusted EBITDA and adjusted EBITDA per share alongside other financial performance measures, including various cash flow metrics, net income, net margin, and our other GAAP results. The following table presents a reconciliation of net income to adjusted EBITDA and adjusted EBITDA per share for each of the periods indicated:

Reconciliation of Non-GAAP Measures

PetMed Express, Inc.

(Unaudited)

Three Months Ended

Nine Months Ended

($ in thousands, except percentages)

December 31,

2021

December 31,

2020

$

Change

%

Change

December 31,

2021

December 31,

2020

$

Change

%

Change

Consolidated Reconciliation of GAAP Net Income to Adjusted EBITDA:

Net income

$ 4,257 $ 7,611 $ (3,354 ) -44 % $ 15,034 $ 23,791 $ (8,757 ) -37 %

Add (subtract):

Share-based compensation

$ 1,440 $ 782 $ 658 84 % $ 3,040 $ 2,294 $ 746 33 %

Income Taxes

$ 1,261 $ 2,100 $ (839 ) -40 % $ 4,603 $ 6,576 $ (1,973 ) -30 %

Depreciation

$ 710 $ 622 $ 88 14 % $ 2,051 $ 1,791 $ 260 15 %

Interest Income/Expense

$ (84 ) $ (73 ) $ (11 ) 15 % $ (243 ) $ (229 ) $ (14 ) 6 %

Adjusted EBITDA

$ 7,584 $ 11,042 $ (3,458 ) -31 % $ 24,485 $ 34,223 $ (9,738 ) -28 %
Exhibit 99.1 Page 5 of 6

Three Months Ended

Nine Months Ended

($ in thousands, except percentages and per share amounts)

December 31,

2021

December 31,

2020

$

Change

%

Change

December 31,

2021

December 31,

2020

$

Change

%

Change

Consolidated Reconciliation of GAAP Net Income Per Share to Adjusted EBITDA per share:

Net income per share, diluted

$ 0.21 $ 0.38 $ (0.17 ) -45 % $ 0.74 $ 1.18 $ (0.45 ) -38 %

Add (subtract):

Share-based compensation

$ 0.07 $ 0.04 $ 0.03 82 % $ 0.15 $ 0.11 $ 0.04 31 %

Income Taxes

$ 0.06 $ 0.10 $ (0.04 ) -41 % $ 0.22 $ 0.33 $ (0.10 ) -31 %

Depreciation

$ 0.03 $ 0.03 $ 0.00 13 % $ 0.10 $ 0.09 $ 0.01 13 %

Interest Income/Expense

$ (0.00 ) $ (0.00 ) $ (0.00 ) 14 % $ (0.01 ) $ (0.01 ) $ 0.00 5 %

Adjusted EBITDA Per Share

$ 0.37 $ 0.55 $ (0.18 ) -32 % $ 1.20 $ 1.70 $ (0.50 ) -29 %
Exhibit 99.1 Page 6 of 6

Disclaimer

PetMed Express Inc. published this content on 25 January 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 25 January 2022 20:27:43 UTC.


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Sales 2022 277 M - -
Net income 2022 20,2 M - -
Net cash 2022 113 M - -
P/E ratio 2022 20,4x
Yield 2022 5,99%
Capitalization 408 M 408 M -
EV / Sales 2022 1,07x
EV / Sales 2023 1,04x
Nbr of Employees 219
Free-Float 93,2%
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Managers and Directors
Matthew N. Hulett President, Chief Executive Officer & Director
Bruce S. Rosenbloom Chief Financial Officer & Treasurer
Gian Mark Fulgoni Chairman
Mark Moseley Chief Technology & Information Officer
Ronald J. Korn Independent Director
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