November 8, 2012

MWI Veterinary Supply Announces 2012 Fourth Quarter and Fiscal Year Results

BOISE, ID -- (Marketwire) -- 11/08/12 -- MWI Veterinary Supply, Inc. (NASDAQ: MWIV) (the "Company") announced financial results today for its fourth quarter and fiscal year ended September 30, 2012.

Highlights:

  • Total revenues were $551.4 million for the quarter, 30.9% higher than revenues for the same period in the prior fiscal year. Excluding the impact of the acquisition of the assets of Micro Beef Technologies, Ltd. ("Micro") which was acquired on October 31, 2011, organic revenue growth was 13.8% in the United States and 21.0% in the United Kingdom for the quarter compared to the same period in the prior fiscal year. Total revenues were $2.08 billion for the fiscal year, 32.6% higher than revenues for the same period in the prior fiscal year.
  • Gross profit as a percentage of total revenues improved to 12.4% for the quarter, compared to 12.0% in the same period of the prior fiscal year.
  • Operating income was $19.7 million for the quarter, 26.3% higher than operating income for the same period in the prior fiscal year.
  • Net income was $12.6 million for the quarter, 25.6% higher than net income for the same period in the prior fiscal year. Diluted earnings per share were $0.99 for the quarter, compared to $0.80 for the same period in the prior fiscal year. Diluted earnings per share were $4.23 for the fiscal year, compared to $3.40 for the prior fiscal year.
  • Internet sales to independent veterinary practices and producers in the United States grew by approximately 29.1% for the quarter compared to the same period in the prior fiscal year, which is more than double our organic revenue growth in the United States for the same period.
  • Revenues from our veterinary pharmacy programs increased approximately 36% to $52.6 million for the quarter compared to the same period in the prior fiscal year.
  • During fiscal year 2012 we added 90 new sales representatives, including 50 new sales representatives as a result of the acquisition of Micro, bringing our total number of U.S. field sales representatives to 316 and telesales representatives to 168.

"MWI delivered another great quarter and fiscal year with strong financial and operational performance," said Jim Cleary, President and Chief Executive Officer. "The excellent execution by our team members continued to drive our business growth and positive results for our customers and vendor partners. This past fiscal year brought many new changes to our company, including the acquisition of Micro, and we look forward to additional progress in fiscal year 2013 for our company and team members."

Quarter ended September 30, 2012 compared to quarter ended September 30, 2011

Total revenues increased 30.9% to $551.4 million for the quarter ended September 30, 2012, compared to $421.3 million for the quarter ended September 30, 2011. Excluding the impact of the acquisition of the assets of Micro, organic revenue growth in the United States was 13.8% for the quarter ended September 30, 2012, compared to the same period in the prior fiscal year. Revenues from the acquisition of Micro were $68.4 million for the quarter ended September 30, 2012. Revenue growth in the United Kingdom was 18.6% for the quarter ended September 30, 2012, compared to the same period in the prior fiscal year, consisting of 21.0% organic growth and a decline of 2.4% related to foreign currency exchange. Commissions decreased 12.0% to $4.3 million for the quarter ended September 30, 2012, compared to $4.9 million for the quarter ended September 30, 2011. Commissions declined due to the loss of a pet food line that we represented for most of fiscal year 2011 that we did not represent in fiscal year 2012 and a shift in commissions to buy-sell revenues for certain parasiticides.

Gross profit increased by 35.3% to $68.3 million for the quarter ended September 30, 2012, compared to $50.4 million for the quarter ended September 30, 2011. Gross profit as a percentage of total revenues increased to 12.4% for the quarter ended September 30, 2012, compared to 12.0% for the quarter ended September 30, 2011 primarily due to improved product margin and freight as a percentage of total revenues partially offset by the decrease in commissions described above. Vendor rebates for the quarter ended September 30, 2012 increased by $717,000 compared to the quarter ended September 30, 2011 due to the timing of manufacturer programs.

Operating income increased 26.3% to $19.7 million for the quarter ended September 30, 2012, compared to $15.6 million for the quarter ended September 30, 2011. SG&A expenses increased 38.2% to $46.3 million for the quarter ended September 30, 2012, compared to $33.5 million for the quarter ended September 30, 2011. SG&A expenses as a percentage of total revenues were 8.4% for the quarter ended September 30, 2012, compared to 8.0% for the quarter ended September 30, 2011. The increase in SG&A expenses was primarily due to the addition of Micro and the added support for our revenue growth. Additionally, we had compensation expense related to accelerated vesting on restricted stock awards granted during the quarter ended September 30, 2012 that did not occur in the same period of the prior fiscal year.

Net income increased 25.6% to $12.6 million for the quarter ended September 30, 2012, compared to $10.0 million for the quarter ended September 30, 2011. Diluted earnings per share were $0.99 and $0.80 for the quarters ended September 30, 2012 and 2011, respectively, an increase of 23.8%.

Fiscal year ended September 30, 2012 compared to fiscal year ended September 30, 2011

Total revenues increased 32.6% to $2.08 billion for the fiscal year ended September 30, 2012, compared to $1.57 billion for the fiscal year ended September 30, 2011. Excluding the impact of the acquisition of the assets of Micro, revenue growth in the United States was 17.3% for the fiscal year ended September 30, 2012, compared to the same period in the prior fiscal year. Revenues from the acquisition of Micro, which was acquired on October 31, 2011, were $246.6 million for the fiscal year ended September 30, 2012. Revenue growth in the United Kingdom was 14.7% for the fiscal year ended September 30, 2012, compared to the same period in the prior fiscal year, consisting of 16.8% organic growth and a decline of 2.1% related to foreign currency exchange. Commissions decreased 17.8% to $17.0 million during the fiscal year ended September 30, 2012, compared to $20.7 million during the fiscal year ended September 30, 2011. The decrease was due to the same reasons described above for the quarter ended September 30, 2012.

Gross profit increased by 29.8% to $266.9 million for the fiscal year ended September 30, 2012, compared to $205.6 million for the fiscal year ended September 30, 2011. Gross profit as a percentage of total revenues was 12.9% for the fiscal year ended September 30, 2012, compared to 13.1% for the fiscal year ended September 30, 2011. The decrease was due to a reduction in commissions, lower product margins and lower vendor rebates as a percentage of total revenues, partially offset by improved freight as a percentage of revenues. Vendor rebates for the fiscal year ended September 30, 2012 increased by approximately $1,330,000 compared to the fiscal year ended September 30, 2011.

Operating income increased 24.9% to $85.8 million for the fiscal year ended September 30, 2012, compared to $68.7 million for the fiscal year ended September 30, 2011. SG&A expenses increased 31.7% to $172.1 million for the fiscal year ended September 30, 2012, compared to $130.7 million for the fiscal year ended September 30, 2011. The increase in the SG&A expenses for the fiscal year was due to the same reasons described above for the quarter ended September 30, 2012. SG&A expenses as a percentage of total revenues were 8.3% for each of the fiscal years ended September 30, 2012 and 2011.

Net income increased 25.6% to $53.5 million for the fiscal year ended September 30, 2012, compared to $42.6 million for the fiscal year ended September 30, 2011. Diluted earnings per share were $4.23 and $3.40 for the fiscal year ended September 30, 2012 and 2011, respectively, an increase of 24.4%.

As of September 30, 2012, we had $48.1 million outstanding on our credit facilities. The increase in the outstanding balance on our credit facilities of $45.2 million from September 30, 2011 resulted from the acquisition of Micro.

Business Outlook

The Company estimates that for the fiscal year ending September 30, 2013, revenues will be from $2.285 billion to $2.335 billion, which represents growth of 10.1% to 12.5% compared to revenues in fiscal year 2012. The Company estimates that diluted earnings per share will be from $4.66 to $4.80 per share, which represents growth of 10.2% to 13.5% compared to diluted earnings per share in fiscal year 2012. These estimates are based on the Company's current calendar-year and quarterly vendor contracts which typically undergo annual renegotiation and which may include terms such as rebates, commissions and exclusivity requirements.

Conference Call

The Company will be hosting a conference call on November 8, 2012 at 11:00 a.m. eastern time to discuss in greater detail these results and its fiscal year 2013 business outlook. Participants can access the conference call by dialing (877) 638-4561 and international callers can access the conference call by dialing (720) 545-0002. The conference call will also be carried live on the Company's web site at www.mwivet.com. Audio replay will be made available through November 15, 2012 by calling (855) 859-2056 for calls within the United States or (404) 537-3406 for international calls using the passcode 57597522. The conference call will also be available on the Company's web site, www.mwivet.com.

MWI is a leading distributor of animal health products across the United States of America and United Kingdom. MWI sells both companion animal and production animal products including pharmaceuticals, vaccines, parasiticides, diagnostics, micro feed ingredients, supplies, pet food, capital equipment and nutritional products. MWI also is a leading innovator and provider of value-added services and technologies used by veterinarians and producers. For more information about MWI, please visit our website at www.mwivet.com. For investor relations information please contact Mary Pat Thompson, Senior Vice President of Finance and Administration, and Chief Financial Officer at (208) 955-8930 or email investorrelations@mwivet.com.

Certain statements contained herein that are not descriptions of historical facts are "forward-looking" statements (as such term is defined in the Private Securities Litigation Reform Act of 1995). Because such statements include risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements. Factors that could cause results to differ materially from those expressed or implied by such forward-looking statements include, but are not limited to, those discussed in filings made by the Company with the Securities and Exchange Commission. Many of the factors that will determine the Company's future results are beyond the ability of management to control or predict. Readers should not place undue reliance on forward-looking statements, which reflect management's views only as of the date hereof. The Company undertakes no obligation to revise or update any forward-looking statements, or to make any other forward-looking statements, whether as a result of new information, future events or otherwise. Important assumptions and other important factors that could cause actual results to differ materially from those set forth in the forward-looking information include the impact of vendor consolidation on our business; changes in or availability of vendor rebate programs; exclusivity requirements with certain vendors that may prohibit us from distributing competing products manufactured by other vendors; transitional challenges associated with acquisitions, including the failure to achieve anticipated synergies; vendor contracts or rebates based upon attaining certain growth goals; changes in the way vendors introduce products to market; seasonality; unforeseen litigation; risks associated with our international operations; financial risks associated with acquisitions; the impact of general economic trends on our business; the recall of a significant product by one of our vendors; extended shortage or backorder of a significant product by one of our vendors; the timing and effectiveness of marketing programs offered by our vendors; the timing of the introduction of new products and services by our vendors; the ability to borrow on our credit line, extend the terms of our credit line or obtain alternative financing on favorable terms or at all; risks from potential increases in variable interest rates; the impact of tightening credit standards and/or access to credit on behalf of our customers and suppliers; a disruption caused by adverse weather or other natural conditions; inability to ship products to the customer as a result of technological or shipping disruptions; and competition. Other factors include changes in the rate of inflation; changes in state or federal legislation or regulation; the continued safety of the products the Company sells; and changes in the general economy. Investors should also be aware that while we do, from time to time, communicate with securities analysts, it is against our policy to disclose any material non-public information or other confidential commercial information. Accordingly, stockholders should not assume that we agree with any statement or report issued by any analyst irrespective of the content of the statement or report. Furthermore, we have a policy against issuing or confirming financial forecasts or projections issued by others. Thus, to the extent that reports issued by securities analysts contain any projections, forecasts or opinions, such reports are not the responsibility of MWI Veterinary Supply, Inc.


                        MWI Veterinary Supply, Inc.

  (Unaudited - Dollars and shares in thousands, except per share amounts)



                               Quarter Ended              Year Ended

Condensed Consolidated         September 30,             September 30,

Statements of Income         2012         2011         2012         2011

                         -----------  -----------  -----------  -----------

Revenues                 $   551,406  $   421,318  $ 2,075,146  $ 1,565,340

Cost of product sales        483,141      370,878    1,808,230    1,359,755

                         -----------  -----------  -----------  -----------

Gross profit                  68,265       50,440      266,916      205,585

Selling, general and

 administrative expenses      46,305       33,496      172,104      130,656

Depreciation and

 amortization                  2,306        1,384        9,045        6,263

                         -----------  -----------  -----------  -----------

Operating income              19,654       15,560       85,767       68,666

Interest expense                (242)        (141)        (926)        (741)

Other income                     328          194        1,099          775

                         -----------  -----------  -----------  -----------

Income before taxes           19,740       15,613       85,940       68,700

Income tax expense            (7,140)      (5,583)     (32,463)     (26,120)

                         -----------  -----------  -----------  -----------

Net income               $    12,600  $    10,030  $    53,477  $    42,580

                         ===========  ===========  ===========  ===========



Net income per share -

 diluted                 $      0.99  $      0.80  $      4.23  $      3.40

Weighted average common

 shares outstanding -

 diluted                      12,672       12,531       12,647       12,513

                         -----------  -----------  -----------  -----------






                                                 September 30, September 30,

Condensed Consolidated Balance Sheets                 2012          2011

                                                 ------------- -------------

Assets

  Cash                                           $         514 $         606

  Receivables, net                                     288,922       215,861

  Inventories                                          251,375       170,065

  Prepaid expenses and other current assets             10,094        10,079

  Deferred income taxes                                  1,580         1,672

                                                 ------------- -------------

    Total current assets                               552,485       398,283



  Property and equipment, net                           35,784        25,209

  Goodwill                                              61,841        49,041

  Intangibles, net                                      38,706        24,894

  Other assets, net                                      7,567         6,792

                                                 ------------- -------------

    Total Assets                                 $     696,383 $     504,219

                                                 ============= =============



Liabilities

  Credit facilities                              $      48,080 $       2,907

  Accounts payable                                     258,741       182,594

  Accrued expenses and other current liabilities        19,952        16,385

  Current portion of capital lease obligations             337           909

                                                 ------------- -------------

    Total current liabilities                          327,110       202,795



  Deferred income taxes                                  7,180         5,989

  Long-term debt and capital lease obligations             104           354

  Other long-term liabilities                            2,687         2,271

Stockholders' Equity                                   359,302       292,810

                                                 ------------- -------------

  Total Liabilities and Stockholders' Equity     $     696,383 $     504,219

                                                 ============= =============

Mary Pat Thompson

Senior Vice President of Finance and Administration, and Chief Financial Officer

(208) 955-8930

Email Contact



Source: MWI Veterinary Supply

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