PetMeds® Announces Its First Quarter Financial Results and Declares a Quarterly Dividend of $0.30 Per Share
31 Juillet 2023 - 10:01PM
PetMed Express, Inc. (NASDAQ: PETS) (“PetMeds” or “Company”), Your
Trusted Pet Health Expert™, today announced its financial results
for its first quarter ended June 30, 2023.
Quarterly Highlights
- Net sales for the quarter ended
June 30, 2023, were $78.2 million, compared to $70.2 million
for the first quarter in the prior year, an increase of
11.5%.
- PetMeds reported an increase in
new customers of 25% year over year for the quarter ended
June 30, 2023, representing the third consecutive quarter of
new customer growth. This includes new customers from the PetCareRx
acquisition.
- Net loss for the quarter ended
June 30, 2023 was $(0.9) million, or $(0.04) per diluted
share, including $1.1 million of acquisition related costs expensed
in the quarter. The quarterly results compare to net income of $2.8
million, or $0.14 diluted earnings per share, for the prior year
quarter ended June 30, 2022.
- Adjusted EBITDA1 of $3.3 million
for the current year quarter, compared to Adjusted EBITDA of $6.3
million, for the quarter ended June 30, 2022, a decrease of
47%. The decrease was due to increased gross profit and other
income, offset by higher G&A expenses and advertising
expenses.
- PetMeds successfully closed on the
acquisition of PetCareRx on April 3, 2023 and is including
almost a full quarter of results in the consolidated results ended
June 30, 2023.
"This quarter's performance is a pivotal step in
our Company's transformative path,” said Matt Hulett, CEO and
President. “After over two years of declining revenues, we have
successfully achieved year-over-year growth in our top line.”
Hulett continued, “Not only did revenue increase by 11.5%,
year-over-year, but 49% of our total revenue was derived from
recurring sources such as our AutoShip subscription and PetPlus
membership programs. Our journey towards becoming a leader in
comprehensive pet health expertise is showing promising progress.
The acquisition of PetCareRx has unlocked tremendous growth
opportunities, allowing us to expand our product catalog and
capitalize on synergies between the two. "
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 August 18, 2023, to
shareholders of record at the close of business on August 14,
2023. The declaration and payment of future dividends is
discretionary and will be subject to the determination by the Board
of Directors.
This afternoon the Company will host a
conference call to review the quarter’s financial
results.
Time: 4:30 P.M. Eastern Time,
July 31, 2023Public call dial in (877)
407-0789 (toll free) or (201) 689-8562. Webcast
stream link:
https://investors.petmeds.com/overview/default.aspx for those who
wish to stream the call via webcast. Replay:
Available until August 14, 2023, at 11:59 P.M Eastern Time. To
access the replay, call (844) 512-2921 (toll free) or (412)
317-6671 and enter passcode 13740086.
Founded in 1996, PetMeds is Your Trusted Pet
Health Expert™, providing prescription and non-prescription
medications, food, supplements, supplies and vet services for dogs,
cats, and horses at competitive prices direct to the consumer
through its 1-800-PetMeds toll free number and 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 the “Risk Factors” and “Management’s
Discussion and Analysis of Financial Condition and Results of
Operations” section in the Company’s Annual Report on Form 10-K for
the year ended March 31, 2023. 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-Qs and its Annual Reports on Form 10-K.
PETMEDS INVESTOR RELATIONS
CONTACTBrian M. Prenoveau, CFAMZ
Group561-489-5315investor@petmeds.com
PETMEDS MEDIA CONTACTMary Eva
TredwayButin PRmaryeva@butinpr.com
PETMED EXPRESS, INC. AND
SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE
SHEETS(In thousands, except for per share
data) |
|
|
June 30,2023 |
|
March 31,2023 |
|
(Unaudited) |
|
|
ASSETS |
|
|
|
|
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
61,534 |
|
$ |
104,086 |
Accounts receivable, less allowance for doubtful accounts of $38
and $35, respectively |
|
1,894 |
|
|
1,740 |
Inventories - finished goods |
|
32,324 |
|
|
19,023 |
Prepaid expenses and other current assets |
|
8,530 |
|
|
4,719 |
Prepaid income taxes |
|
1,548 |
|
|
1,883 |
Total current assets |
|
105,830 |
|
|
131,451 |
|
|
|
|
Noncurrent assets: |
|
|
|
Property and equipment, net |
|
27,207 |
|
|
26,178 |
Intangible and other assets, net |
|
17,671 |
|
|
5,860 |
Goodwill |
|
20,735 |
|
|
– |
Operating lease right-of-use assets, net |
|
2,024 |
|
|
– |
Deferred tax assets, net |
|
7,270 |
|
|
628 |
Total noncurrent assets |
|
74,907 |
|
|
32,666 |
|
|
|
|
Total assets |
$ |
180,737 |
|
$ |
164,117 |
|
|
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY |
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ |
40,037 |
|
$ |
25,208 |
Accrued expenses and other current liabilities |
|
13,240 |
|
|
11,289 |
Current lease liabilities |
|
799 |
|
|
– |
Deferred revenue |
|
3,246 |
|
|
– |
Total current liabilities |
|
57,322 |
|
|
36,497 |
|
|
|
|
Long-term lease
liabilities |
|
1,268 |
|
|
– |
Other long-term
liabilities |
|
3,825 |
|
|
3,825 |
|
|
|
|
Total liabilities |
|
62,415 |
|
|
40,322 |
|
|
|
|
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, $0.001 par value, 40,000 shares authorized; 21,170
and 21,084 shares issued and outstanding, respectively |
|
21 |
|
|
21 |
Additional paid-in capital |
|
20,037 |
|
|
18,277 |
Retained earnings |
|
98,255 |
|
|
105,488 |
|
|
|
|
Total shareholders' equity |
|
118,322 |
|
|
123,795 |
|
|
|
|
Total liabilities and
shareholders' equity |
$ |
180,737 |
|
$ |
164,117 |
PETMED EXPRESS, INC. AND
SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF
INCOME(In thousands, except for per share amounts)
(Unaudited) |
|
|
|
Three Months EndedJune 30, |
|
|
2023 |
|
2022 |
|
|
|
|
|
Sales |
|
$ |
78,244 |
|
|
$ |
70,187 |
Cost of sales |
|
|
55,718 |
|
|
|
50,244 |
|
|
|
|
|
Gross profit |
|
|
22,526 |
|
|
|
19,943 |
|
|
|
|
|
Operating expenses: |
|
|
|
|
General and administrative |
|
|
15,711 |
|
|
|
9,351 |
Advertising |
|
|
7,265 |
|
|
|
6,349 |
Depreciation and amortization |
|
|
1,678 |
|
|
|
753 |
Total operating expenses |
|
|
24,654 |
|
|
|
16,453 |
|
|
|
|
|
(Loss) income from
operations |
|
|
(2,128 |
) |
|
|
3,490 |
|
|
|
|
|
Other income: |
|
|
|
|
Interest income, net |
|
|
620 |
|
|
|
117 |
Other, net |
|
|
506 |
|
|
|
198 |
Total other income |
|
|
1,126 |
|
|
|
315 |
|
|
|
|
|
(Loss) income before (benefit)
provision for income taxes |
|
|
(1,002 |
) |
|
|
3,805 |
|
|
|
|
|
(Benefit) provision for income
taxes |
|
|
(115 |
) |
|
|
1,030 |
|
|
|
|
|
Net (loss) income |
|
$ |
(887 |
) |
|
$ |
2,775 |
|
|
|
|
|
Net (loss) income per common
share: |
|
|
|
|
Basic |
|
$ |
(0.04 |
) |
|
$ |
0.14 |
Diluted |
|
$ |
(0.04 |
) |
|
$ |
0.14 |
|
|
|
|
|
Weighted average number of
common shares outstanding: |
|
|
|
|
Basic |
|
|
20,333 |
|
|
|
20,208 |
Diluted |
|
|
20,333 |
|
|
|
20,291 |
|
|
|
|
|
Cash dividends declared per
common share |
|
$ |
0.30 |
|
|
$ |
0.30 |
PETMED EXPRESS, INC. AND
SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS(In thousands) (Unaudited) |
|
|
Three Months EndedJune 30, |
|
2023 |
|
2022 |
Cash flows from operating
activities: |
|
|
|
Net (loss) income |
$ |
(887 |
) |
|
$ |
2,775 |
|
Adjustments to reconcile net (loss) income to net cash provided by
operating activities: |
|
|
|
Depreciation and amortization |
|
1,678 |
|
|
|
753 |
|
Share based compensation |
|
1,760 |
|
|
|
1,536 |
|
Deferred income taxes |
|
(450 |
) |
|
|
(294 |
) |
Bad debt expense |
|
19 |
|
|
|
45 |
|
(Increase) decrease in operating assets and increase (decrease) in
operating liabilities: |
|
|
|
Accounts receivable |
|
(46 |
) |
|
|
86 |
|
Inventories - finished goods |
|
(10,185 |
) |
|
|
9,880 |
|
Prepaid income taxes |
|
335 |
|
|
|
681 |
|
Prepaid expenses and other current assets |
|
(2,390 |
) |
|
|
451 |
|
Operating lease right-of-use assets, net |
|
196 |
|
|
|
– |
|
Accounts payable |
|
9,115 |
|
|
|
(10,469 |
) |
Accrued expenses and other current liabilities |
|
1,369 |
|
|
|
97 |
|
Lease liabilities |
|
(205 |
) |
|
|
– |
|
Deferred revenue |
|
253 |
|
|
|
– |
|
Income taxes payable |
|
– |
|
|
|
839 |
|
Net cash provided by operating
activities |
$ |
562 |
|
|
$ |
6,380 |
|
|
|
|
|
Cash flows from investing
activities: |
|
|
|
Purchase of minority interest investment in Vetster |
|
– |
|
|
|
(5,000 |
) |
Acquisition of PetCareRx, net of cash acquired |
|
(35,859 |
) |
|
|
– |
|
Purchases of property and equipment |
|
(1,153 |
) |
|
|
(982 |
) |
Net cash used in investing
activities |
$ |
(37,012 |
) |
|
$ |
(5,982 |
) |
|
|
|
|
Cash flows from financing
activities: |
|
|
|
Dividends paid |
|
(6,102 |
) |
|
|
(6,064 |
) |
Net cash used in financing
activities |
$ |
(6,102 |
) |
|
$ |
(6,064 |
) |
|
|
|
|
Net decrease in cash and cash
equivalents |
|
(42,552 |
) |
|
|
(5,666 |
) |
Cash and cash equivalents, at
beginning of period |
|
104,086 |
|
|
|
111,080 |
|
|
|
|
|
Cash and cash equivalents, at
end of period |
$ |
61,534 |
|
|
$ |
105,414 |
|
|
|
|
|
Supplemental disclosure of
cash flow information: |
|
|
|
|
|
|
|
Cash paid for income taxes |
$ |
– |
|
|
$ |
– |
|
|
|
|
|
Dividends payable in accrued expenses |
$ |
1,507 |
|
|
$ |
791 |
|
|
|
|
|
|
|
|
|
Non-GAAP Financial Measures
To provide investors and the market with
additional information regarding our financial results, we have
disclosed (see below) adjusted EBITDA, a non-GAAP financial measure
that we calculate as net income excluding share-based compensation
expense; depreciation and amortization; income tax provision;
interest income (expense); and other non-operational expenses. We
have provided reconciliations below of adjusted EBITDA to net
income, the most directly comparable GAAP financial measures.
We have included adjusted EBITDA, herein,
because it is a key measure 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 and other expenses. Accordingly, we
believe that adjusted EBITDA provides 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, depreciation and
amortization from our adjusted EBITDA 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 and interest income
(expense), as neither are components of our core business
operations. We also believe that it is useful to exclude other
expenses, including the investment banking fee related to the
Vetster partnership, acquisition costs related to PetCareRx,
employee severance and estimated state sales tax accrual as these
items are not indicative of our ongoing operations. Adjusted EBITDA
has limitations as a financial measure, and these non-GAAP measures
should not be considered 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 does not reflect capital expenditure
requirements for such replacements or for new capital
expenditures;
- Adjusted EBITDA 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 does not reflect
interest income (expense), net; or changes in, or cash requirements
for, our working capital;
- Adjusted EBITDA does not reflect
transaction related costs and other items which are either not
representative of our underlying operations or are incremental
costs that result from an actual or planned transaction and include
litigation matters, integration consulting fees, internal salaries
and wages (to the extent the individuals are assigned full-time to
integration and transformation activities) and certain costs
related to integrating and converging IT systems;
- Adjusted EBITDA does not reflect certain non-operating expenses
including the employee severance which reduces cash available to
us;
- Adjusted EBITDA does not reflect certain expenses including the
estimated state sales tax accrual which reduces cash available to
us.
- Other companies, including
companies in our industry, may calculate adjusted EBITDA
differently, which reduces the measures usefulness as comparative
measures.
Because of these and other limitations, adjusted
EBITDA should only be considered as supplemental to, and alongside
with other GAAP based 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, the most directly comparable GAAP measure to adjusted
EBITDA for each of the periods indicated:
Reconciliation of Non-GAAP MeasuresPetMed
Express, Inc.(Unaudited) |
|
|
Three Months Ended |
|
|
|
|
($ in thousands,
except percentages) |
June 30,2023 |
|
June 30,2022 |
|
$Change |
|
%Change |
|
|
|
|
|
|
|
|
Consolidated Reconciliation of GAAP Net Income to Adjusted
EBITDA: |
|
|
|
|
|
|
|
|
Net (loss)
income |
$ |
(887 |
) |
|
$ |
2,775 |
|
|
$ |
(3,662 |
) |
|
(132 |
)% |
|
|
|
|
|
|
|
|
Add
(subtract): |
|
|
|
|
|
|
|
Share-based Compensation |
$ |
1,760 |
|
|
$ |
1,536 |
|
|
$ |
224 |
|
|
15 |
% |
Income Taxes |
$ |
(115 |
) |
|
$ |
1,030 |
|
|
$ |
(1,145 |
) |
|
(111 |
)% |
Depreciation and Amortization |
$ |
1,678 |
|
|
$ |
753 |
|
|
$ |
925 |
|
|
123 |
% |
Interest (Income)/Expense |
$ |
(620 |
) |
|
$ |
(117 |
) |
|
$ |
(503 |
) |
|
430 |
% |
Acquisition/Partnership Transactions and Other
Items |
$ |
1,126 |
|
|
$ |
355 |
|
|
$ |
771 |
|
|
n/m |
Employee Severance |
$ |
393 |
|
|
$ |
– |
|
|
$ |
393 |
|
|
n/m |
Adjusted
EBITDA |
$ |
3,335 |
|
|
$ |
6,332 |
|
|
$ |
(2,997 |
) |
|
(47 |
)% |
____________________1 Adjusted EBITDA is a non-GAAP financial
measure. See “Non-GAAP Financial Measures” for additional
information on non-GAAP financial measures and a reconciliation to
the most comparable GAAP measures.
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