PetMeds® Announces Its Fourth Quarter and Fiscal Year End Financial Results and Declares a Quarterly Dividend of $0.30 Per Share
May 22 2023 - 3:01PM
PetMed Express, Inc. (NASDAQ: PETS), Your Trusted Pet Health
Expert™, today announced its financial results for its fourth
quarter and fiscal year ended March 31, 2023.
Quarterly Highlights
- Net sales for the quarter ended March 31, 2023, were $62.4
million, compared to $66.0 million for the fourth quarter in the
prior year, a decrease of 5.4%.
- New customers increased 12% year over year for the quarter
ended March 31, 2023 representing the second consecutive
quarter of quarterly year-over-year new customer growth following a
2 ½ year period without such growth.
- Net loss for the quarter ended March 31, 2023 was $(5.1)
million, or $(0.25) diluted earnings per share, and includes $7.9
million, or $0.29 per diluted share, for items which management
believes are not indicative of our ongoing operations. This
compares to net income of $6.1 million, or $0.30 diluted earnings
per share, for the prior year quarter ended March 31,
2022.
- Adjusted EBITDA1 was $3.6 million for the current year quarter,
compared to Adjusted EBITDA of $9.5 million, for the quarter ended
March 31, 2022, a decrease of 61.8%.
Annual Highlights
- Net sales for the fiscal year ended March 31, 2023, were
$256.9 million, compared to $273.4 million for the prior year, a
decrease of 6.1%.
- Net income for the fiscal year ended March 31, 2023 was
$233.0 thousand, or $0.01 diluted earnings per share, and includes
$9.7 million, or $0.36 per diluted share, for items not indicative
of our ongoing operations. This compares to net income of $21.1
million, or $1.04 diluted earnings per share, for the prior fiscal
year ended March 31, 2022.
- Adjusted EBITDA was $19.8 million, for the fiscal year ended
March 31, 2023, compared to Adjusted EBITDA of $34.0 million
for the fiscal year ended March 31, 2022, a decrease of
41.9%.
"Fiscal 2023, particularly in the final quarter,
represented a critical investment timeframe for PetMeds, as we
strengthened the team, enhanced our systems, identified PetCareRx
as a strategic acquisition opportunity, and turned our focus to
incorporating our newly added investments. Revenue was down year
over year by 6.1% but higher quarter over quarter. AutoShip &
Save recurring revenue is the highest it's ever been at 44%, and
new customers increased 12% for the quarter," said Matt Hulett, CEO
and President.
Mr. Hulett continued, "We are progressing on our
growth strategy, expanding our product catalog, building recurring
revenue, growing our customer base, and adding differentiated
services with our exclusive Vetster partnership and strategic
Pumpkin partnership. We have built a solid foundation for future
revenue growth and will continue our focus on the integration and
execution of our strategic initiatives. We are confident this
process will begin to bear fruit as each component achieves
scale."
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 June 12, 2023, to shareholders of
record at the close of business on June 6, 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,
May 22, 2023Public call dial in (877)
407-0789 (toll free) or (201) 689-8562. Webcast
stream link: https://investors.petmeds.com for those
who wish to stream the call via webcast.
Replay: Available until June 5, 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 13738424.
Founded in 1996, PetMeds is Your Trusted Pet
Health Expert™, 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 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, 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-Q and its Annual Report 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) |
|
March 31,2023 |
|
March 31,2022 |
|
(Unaudited) |
|
|
ASSETS |
|
|
|
|
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
104,086 |
|
$ |
111,080 |
Accounts receivable, less allowance for doubtful accounts of $35
and $39, respectively |
|
1,740 |
|
|
1,913 |
Inventories - finished goods |
|
19,023 |
|
|
32,455 |
Prepaid expenses and other current assets |
|
4,719 |
|
|
4,866 |
Prepaid income taxes |
|
1,883 |
|
|
681 |
Total current assets |
|
131,451 |
|
|
150,995 |
|
|
|
|
Noncurrent assets: |
|
|
|
Property and equipment, net |
|
26,178 |
|
|
24,464 |
Intangible and other assets |
|
5,860 |
|
|
860 |
Deferred tax assets |
|
628 |
|
|
— |
Total noncurrent assets |
|
32,666 |
|
|
25,324 |
|
|
|
|
Total assets |
$ |
164,117 |
|
$ |
176,319 |
|
|
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY |
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ |
25,208 |
|
$ |
27,500 |
Accrued expenses and other current liabilities |
|
11,289 |
|
|
5,697 |
Total current liabilities |
|
36,497 |
|
|
33,197 |
|
|
|
|
Deferred tax liabilities |
|
— |
|
|
936 |
Other long-term
liabilities |
|
3,825 |
|
|
— |
|
|
|
|
Total liabilities |
|
40,322 |
|
|
34,133 |
|
|
|
|
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; 21,084 and
20,979 shares |
|
|
|
|
|
issued and outstanding, respectively |
|
21 |
|
|
21 |
Additional paid-in capital |
|
18,277 |
|
|
11,660 |
Retained earnings |
|
105,488 |
|
|
130,496 |
|
|
|
|
Total shareholders' equity |
|
123,795 |
|
|
142,186 |
|
|
|
|
Total liabilities and
shareholders' equity |
$ |
164,117 |
|
$ |
176,319 |
PETMED EXPRESS, INC. AND
SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF
(LOSS) INCOME(In thousands, except for per share
amounts) (Unaudited) |
|
Three Months Ended March 31, |
|
Year Ended March 31, |
|
|
2023 |
|
|
|
2022 |
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
|
|
|
Sales |
$ |
62,407 |
|
|
$ |
66,002 |
|
$ |
256,858 |
|
|
$ |
273,417 |
Cost of sales |
|
45,025 |
|
|
|
46,605 |
|
|
185,844 |
|
|
|
195,341 |
|
|
|
|
|
|
|
|
Gross profit |
|
17,382 |
|
|
|
19,397 |
|
|
71,014 |
|
|
|
78,076 |
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
General and administrative |
|
18,945 |
|
|
|
8,289 |
|
|
49,474 |
|
|
|
30,829 |
Advertising |
|
4,555 |
|
|
|
3,364 |
|
|
19,424 |
|
|
|
18,799 |
Depreciation |
|
994 |
|
|
|
687 |
|
|
3,546 |
|
|
|
2,738 |
Total operating expenses |
|
24,494 |
|
|
|
12,340 |
|
|
72,444 |
|
|
|
52,366 |
|
|
|
|
|
|
|
|
(Loss) income from
operations |
|
(7,112 |
) |
|
|
7,057 |
|
|
(1,430 |
) |
|
|
25,710 |
|
|
|
|
|
|
|
|
Other income: |
|
|
|
|
|
|
|
Interest income, net |
|
857 |
|
|
|
92 |
|
|
2,070 |
|
|
|
335 |
Other, net |
|
226 |
|
|
|
285 |
|
|
944 |
|
|
|
1,026 |
Total other income |
|
1,083 |
|
|
|
377 |
|
|
3,014 |
|
|
|
1,361 |
|
|
|
|
|
|
|
|
(Loss) income before provision
for income taxes |
|
(6,029 |
) |
|
|
7,434 |
|
|
1,584 |
|
|
|
27,071 |
|
|
|
|
|
|
|
|
(Benefit) provision for income
taxes |
|
(927 |
) |
|
|
1,368 |
|
|
1,351 |
|
|
|
5,971 |
|
|
|
|
|
|
|
|
Net (loss) income |
$ |
(5,102 |
) |
|
$ |
6,066 |
|
$ |
233 |
|
|
$ |
21,100 |
|
|
|
|
|
|
|
|
Net (loss) income per common
share: |
|
|
|
|
|
|
|
Basic |
$ |
(0.25 |
) |
|
$ |
0.30 |
|
$ |
0.01 |
|
|
$ |
1.05 |
Diluted |
$ |
(0.25 |
) |
|
$ |
0.30 |
|
$ |
0.01 |
|
|
$ |
1.04 |
|
|
|
|
|
|
|
|
Weighted average number of
common shares outstanding: |
|
|
|
|
|
|
|
Basic |
|
20,329 |
|
|
|
20,208 |
|
|
20,275 |
|
|
|
20,176 |
Diluted |
|
20,339 |
|
|
|
20,335 |
|
|
20,339 |
|
|
|
20,358 |
|
|
|
|
|
|
|
|
Cash dividends declared per
common share |
$ |
0.30 |
|
|
$ |
0.30 |
|
$ |
1.20 |
|
|
$ |
1.20 |
PETMED EXPRESS, INC. AND
SUBSIDIARIESCONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS(In
thousands) (Unaudited) |
|
Year Ended March 31, |
|
|
2023 |
|
|
|
2022 |
|
Cash flows from operating
activities: |
|
|
|
Net income |
$ |
233 |
|
|
$ |
21,100 |
|
Adjustments to reconcile net income to net cash provided by
operating activities: |
|
|
|
Depreciation |
|
3,546 |
|
|
|
2,738 |
|
Share based compensation |
|
6,617 |
|
|
|
4,549 |
|
Deferred income taxes |
|
(1,564 |
) |
|
|
(345 |
) |
Bad debt expense |
|
214 |
|
|
|
165 |
|
(Increase) decrease in operating assets and increase (decrease) in
liabilities: |
|
|
|
Accounts receivable |
|
(41 |
) |
|
|
509 |
|
Inventories - finished goods |
|
13,432 |
|
|
|
1,965 |
|
Prepaid income taxes |
|
(1,202 |
) |
|
|
278 |
|
Prepaid expenses and other current assets |
|
147 |
|
|
|
(363 |
) |
Accounts payable |
|
(2,292 |
) |
|
|
(12,048 |
) |
Accrued expenses and other current liabilities |
|
8,713 |
|
|
|
(50 |
) |
Income taxes payable |
|
— |
|
|
|
— |
|
Net cash provided by operating
activities |
|
27,803 |
|
|
|
18,498 |
|
|
|
|
|
Cash flows from investing
activities: |
|
|
|
Purchase of minority interest investment in Vetster |
|
(5,000 |
) |
|
|
— |
|
Purchases of property and equipment |
|
(5,260 |
) |
|
|
(1,752 |
) |
Net cash used in investing
activities |
|
(10,260 |
) |
|
|
(1,752 |
) |
|
|
|
|
Cash flows from financing
activities: |
|
|
|
Dividends paid |
|
(24,537 |
) |
|
|
(24,384 |
) |
Net cash used in financing
activities |
|
(24,537 |
) |
|
|
(24,384 |
) |
|
|
|
|
Net decrease in cash and cash
equivalents |
|
(6,994 |
) |
|
|
(7,638 |
) |
Cash and cash equivalents, at
beginning of year |
|
111,080 |
|
|
|
118,718 |
|
|
|
|
|
Cash and cash equivalents, at
end of year |
$ |
104,086 |
|
|
$ |
111,080 |
|
|
|
|
|
Supplemental disclosure of
cash flow information: |
|
|
|
|
|
|
|
Cash paid for income taxes |
$ |
4,312 |
|
|
$ |
6,085 |
|
|
|
|
|
Dividends payable in accrued expenses |
$ |
1,262 |
|
|
$ |
558 |
|
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; 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
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 an
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 is a non-cash charges, the assets being depreciated
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) |
March 31,2023 |
|
March 31,2022 |
|
$Change |
|
%Change |
|
|
|
|
|
|
|
|
Consolidated Reconciliation of GAAP Net Income to Adjusted
EBITDA: |
|
|
|
|
|
|
|
|
Net (loss)
income |
$ |
(5,102 |
) |
|
$ |
6,066 |
|
|
$ |
(11,168 |
) |
|
(184)% |
|
|
|
|
|
|
|
|
Add
(subtract): |
|
|
|
|
|
|
|
Share-based Compensation |
$ |
1,630 |
|
|
$ |
1,509 |
|
|
$ |
121 |
|
|
8 |
% |
Income Taxes |
$ |
(927 |
) |
|
$ |
1,368 |
|
|
$ |
(2,295 |
) |
|
(168)% |
Depreciation |
$ |
994 |
|
|
$ |
687 |
|
|
$ |
307 |
|
|
45 |
% |
Interest Income |
$ |
(857 |
) |
|
$ |
(92 |
) |
|
$ |
(765 |
) |
|
832 |
% |
Acquisition/Partnership Transactions and Other
Items |
$ |
1,010 |
|
|
$ |
— |
|
|
$ |
1,010 |
|
|
n/m |
State Sales Tax Accrual |
$ |
6,900 |
|
|
$ |
— |
|
|
$ |
6,900 |
|
|
n/m |
Adjusted
EBITDA |
$ |
3,648 |
|
|
$ |
9,538 |
|
|
$ |
(5,890 |
) |
|
(62)% |
|
Year Ended |
|
|
|
|
($ in thousands,
except percentages) |
March 31,2023 |
|
March 31,2022 |
|
$Change |
|
%Change |
|
|
|
|
|
|
|
|
Consolidated Reconciliation of GAAP Net Income to Adjusted
EBITDA: |
|
|
|
|
|
|
|
|
Net
income |
$ |
233 |
|
|
$ |
21,100 |
|
|
$ |
(20,867 |
) |
|
(99)% |
|
|
|
|
|
|
|
|
Add
(subtract): |
|
|
|
|
|
|
|
Share-based Compensation |
$ |
6,617 |
|
|
$ |
4,549 |
|
|
$ |
2,068 |
|
|
45 |
% |
Income Taxes |
$ |
1,351 |
|
|
$ |
5,971 |
|
|
$ |
(4,620 |
) |
|
(77)% |
Depreciation |
$ |
3,546 |
|
|
$ |
2,738 |
|
|
$ |
808 |
|
|
30 |
% |
Interest Income |
$ |
(2,070 |
) |
|
$ |
(335 |
) |
|
$ |
(1,735 |
) |
|
518 |
% |
Acquisition/Partnership Transactions and Other
Items |
$ |
1,904 |
|
|
$ |
— |
|
|
$ |
1,904 |
|
|
n/m |
Employee Severance |
$ |
364 |
|
|
$ |
— |
|
|
$ |
364 |
|
|
n/m |
State Sales Tax Accrual |
$ |
7,825 |
|
|
$ |
— |
|
|
$ |
7,825 |
|
|
n/m |
Adjusted
EBITDA |
$ |
19,770 |
|
|
$ |
34,023 |
|
|
$ |
(14,253 |
) |
|
(42)% |
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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