MERIDIAN, ID, May 06, 2010 (MARKETWIRE via COMTEX News Network) -- MWI Veterinary Supply, Inc. (NASDAQ: MWIV) (the "Company") announced financial results today for its second quarter ended March 31, 2010.
Highlights:
-- Total revenues were $286.6 million for the quarter, 34% higher than
revenues for the same period in the prior fiscal year. Of the 34%
increase in total revenues, 18% was due to organic growth in the United
States and 16% was related to our acquisition of Centaur Services
Limited ("Centaur"). On February 8, 2010, we acquired Centaur, a
supplier of animal health products to veterinarians in the United
Kingdom.
-- Selling, general and administrative ("SG&A") expenses as a percentage
of total revenues were 8.9% for the quarter, compared to 10.0% for the
same period in the prior fiscal year. Included in SG&A expenses are
direct acquisition-related expenses incurred in connection with the
Centaur acquisition of approximately $915,000. Excluding these
expenses, SG&A expenses as a percentage of total revenues were 8.6% for
the quarter. Accounting Standards Codification 805, Business
Combinations, was effective for MWI on October 1, 2009 and required the
expensing of acquisition-related costs as incurred.
-- Operating income increased 37% to $12.7 million, compared to the same
period in the prior fiscal year. Net income increased 33% to $7.7
million, compared to the same period in the prior fiscal year. Diluted
earnings per share were $0.62 compared to $0.47 in the same period of
the prior fiscal year, an increase of 32%. The impact to diluted
earnings per share as a result of the Centaur acquisition was neutral
after giving effect to the operating results of Centaur and the direct
acquisition-related expenses.
-- We generated $8.5 million in cash from operations during the quarter,
compared to $15.1 million in cash used in operations during the quarter
ended March 31, 2009, and we had borrowings under our credit facilities
of $23.1 million, which includes the borrowings to finance the Centaur
acquisition.
"I am very pleased with MWI's results during the March quarter, particularly our growth in revenues, earnings and value-added services as well as our expense control and generation of cash," said Jim Cleary, President and Chief Executive Officer. "These results demonstrate our employees' continued dedication to providing high quality service to our customers and vendors. I would like to thank our employees both in the United States and the United Kingdom for their excellent work during the quarter. We are very pleased with the addition of Centaur and our collaboration with the Centaur team."
Quarter ended March 31, 2010 compared to quarter ended March 31, 2009
Total revenues increased 34% to $286.6 million for the quarter ended March 31, 2010, compared to $214.5 million for the quarter ended March 31, 2009. Included in total revenues for the quarter ended March 31, 2010 were $33.6 million related to the acquisition of Centaur. Excluding this acquisition, our revenues attributable to existing customers represented approximately 63% of the growth of total revenues during the quarter ended March 31, 2010. Commissions increased 12% to $4.2 million during the quarter ended March 31, 2010, compared to $3.8 million during the quarter ended March 31, 2009.
Gross profit increased 25% to $39.5 million for the quarter ended March 31, 2010, compared to $31.6 million for the quarter ended March 31, 2009. Gross profit was benefited by our revenue growth and the addition of Centaur. Gross profit as a percentage of total revenues was 13.8% for the quarter ended March 31, 2010, compared to 14.7% for the quarter ended March 31, 2009. Gross profit as a percentage of total revenues decreased due to the addition of Centaur because Centaur's gross profit as a percentage of total revenues is generally lower than MWI's, which serves to reduce the overall gross margin of the consolidated Company when compared to our results for the same period in the prior year. Vendor rebates for the quarter ended March 31, 2010 increased by approximately $475,000 compared to the quarter ended March 31, 2009.
Operating income increased 37% to $12.7 million for the quarter ended March 31, 2010, compared to $9.3 million for the quarter ended March 31, 2009. SG&A expenses increased 19% to $25.6 million for the quarter ended March 31, 2010, compared to $21.5 million for the quarter ended March 31, 2009. SG&A expenses increased primarily due to the acquisition of Centaur and our revenue growth. SG&A expenses as a percentage of total revenues improved to 8.9% for the quarter ended March 31, 2010, compared to 10.0% for the quarter ended March 31, 2009. SG&A expenses as a percentage of total revenues decreased due to the addition of Centaur because Centaur's SG&A expenses as a percentage of total revenues are generally lower than MWI's, which serves to reduce the overall SG&A expenses as a percentage of total revenues when compared to our results for the same period in the prior year. Additionally, included in the increase in SG&A expenses for the quarter ended March 31, 2010 are direct acquisition-related expenses of $915,000 incurred in connection with the acquisition of Centaur. Excluding these expenses related to the Centaur acquisition, SG&A expenses as a percentage of total revenues improved to 8.6% for the quarter ended March 31, 2010.
Our effective tax rate for the three months ended March 31, 2010 and 2009 was 39.5% and 38.3%, respectively. This increase is primarily due to the non-deductibility of direct acquisition-related expenses for tax purposes.
Net income increased 33% to $7.7 million for the quarter ended March 31, 2010, compared to $5.8 million for the quarter ended March 31, 2009. Diluted earnings per share were $0.62 and $0.47 for the quarters ended March 31, 2010 and 2009, respectively, an increase of 32%.
Six months ended March 31, 2010 compared to six months ended March 31, 2009
Total revenues increased 17% to $522.7 million for the six months ended March 31, 2010, compared to $446.3 million for the six months ended March 31, 2009. Commissions increased 17% to $7.8 million during the six months ended March 31, 2010, compared to $6.6 million during the six months ended March 31, 2009.
Gross profit increased by 16% to $75.5 million for the six months ended March 31, 2010, compared to $65.3 million for the six months ended March 31, 2009. Gross profit as a percentage of total revenues was 14.4% for the six months ended March 31, 2010, compared to 14.6% for the six months ended March 31, 2009. Vendor rebates for the six months ended March 31, 2010 decreased by approximately $375,000 compared to the six months ended March 31, 2009. This decrease was primarily a result of the elimination of the livestock rebate opportunity from one of our largest vendors, partially offset by improvements in rebates from other vendors.
Operating income increased 34% to $25.4 million for the six months ended March 31, 2010, compared to $19.0 million for the six months ended March 31, 2009. SG&A expenses as a percentage of total revenues were 9.2% for the six months ended March 31, 2010, compared to 10.0% for the six months ended March 31, 2009. SG&A expenses increased 8% to $48.0 million for the six months ended March 31, 2010, compared to $44.6 million for the six months ended March 31, 2009. Included in the increase in SG&A expenses for the six months ended March 31, 2010 are direct acquisition-related expenses of $1.1 million incurred in connection with the acquisition of Centaur. Excluding these expenses related to the Centaur acquisition, SG&A expenses as a percentage of total revenues were 9.0% for the six months ended March 31, 2010.
Net income increased 32% to $15.5 million for the six months ended March 31, 2010, compared to $11.7 million for the six months ended March 31, 2009. Diluted earnings per share were $1.25 and $0.95 for the six months ended March 31, 2010 and 2009, respectively, an increase of 32%.
Our cash balance as of March 31, 2010 was $866,000 and we had $23.1 million outstanding on our credit facilities. Compared to September 30, 2009, receivables increased 25%, inventories increased 24% and accounts payable increased 27%. These increases were due to the balances acquired through the acquisition of Centaur as well as our revenue growth.
Business Outlook
The Company updates its previous estimates for the fiscal year ending September 30, 2010. The Company increases its estimate that revenues will be from $1.16 billion to $1.18 billion, which represents growth of 23% to 25% compared to revenues in fiscal year 2009. The Company increases its estimate that diluted earnings per share will be from $2.40 to $2.45 per share, which represents growth of 19% to 21% compared to diluted earnings per share in fiscal year 2009. All of these estimates give effect to the acquisition of Centaur from February 8, 2010 through September 30, 2010. The Company's previous guidance for the fiscal year ending September 30, 2010, which was provided February 8, 2010 after our acquisition of Centaur, was revenues of approximately $1.14 billion to $1.18 billion and diluted earnings per share of $2.26 to $2.32.
Conference Call
The Company will be hosting a conference call on May 6, 2010 at 11:00 a.m. eastern daylight time to discuss these results and its fiscal year 2010 business outlook in greater detail. 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 May 20, 2010 by calling (800) 642-1687 for calls within the United States or (706) 645-9291 for international calls using the passcode 71087457. 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 to veterinarians across the United States of America and United Kingdom. Products MWI sells include pharmaceuticals, vaccines, parasiticides, diagnostics, capital equipment, supplies, veterinary pet food and nutritional products. We market these products to veterinarians in both the companion animal and production animal markets. 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; vendor rebates based upon attaining certain growth goals; changes in the way vendors introduce products to market; exclusivity requirements with certain vendors that may prohibit us from distributing competing products manufactured by other vendors; risks associated with our international operations; transitional challenges associated with acquisitions, including the failure to achieve anticipated synergies; 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; seasonality; 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; unforeseen litigation; 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)
Condensed
Consolidated
Statements of Three Months Ended March 31, Six Months Ended March 31,
Income 2010 2009 2010 2009
------------- ------------- ------------- -------------
Revenues $ 286,597 $ 214,512 $ 522,708 $ 446,331
Cost of
product sales 247,075 182,878 447,177 381,042
------------- ------------- ------------- -------------
Gross profit 39,522 31,634 75,531 65,289
Selling,
general and
administrative
expenses 25,592 21,498 48,013 44,631
Depreciation
and
amortization 1,266 867 2,121 1,702
------------- ------------- ------------- -------------
Operating
income 12,664 9,269 25,397 18,956
Interest
expense (178) (75) (218) (139)
Other income 188 182 352 397
------------- ------------- ------------- -------------
Income before
taxes 12,674 9,376 25,531 19,214
Income tax
expense (5,003) (3,589) (10,026) (7,478)
------------- ------------- ------------- -------------
Net income $ 7,671 $ 5,787 $ 15,505 $ 11,736
============= ============= ============= =============
Net income per
share -
diluted $ 0.62 $ 0.47 $ 1.25 $ 0.95
Weighted
average
common
shares
outstanding
- diluted 12,376 12,296 12,366 12,296
------------- ------------- ------------- -------------
Condensed
Consolidated
Balance March 31, September 30,
Sheets 2010 2009
------------- -------------
Assets
Cash $ 866 $ 14,302
Receivables,
net 178,564 142,485
Inventories 144,340 116,119
Prepaid
expenses and
other
current
assets 4,367 3,946
Deferred
income taxes 2,152 1,517
------------- -------------
Total
current
assets 330,289 278,369
Property and
equipment,
net 13,579 9,313
Goodwill 48,098 37,610
Intangibles,
net 26,698 10,194
Other assets,
net 2,802 2,433
------------- -------------
Total Assets $ 421,466 $ 337,919
============= =============
Liabilities
Credit
facilities $ 23,136 $ -
Accounts
payable 149,977 117,830
Accrued
expenses 14,029 10,767
Note payable 2,000 -
Current
portion of
long-term
debt and
capital
lease
obligations 1,558 97
------------- -------------
Total
current
liabilities 190,700 128,694
Deferred
income taxes 5,249 1,298
Long-term
debt and
capital
lease
obligations 1,089 -
Other
long-term
liabilities 1,137 -
Stockholders'
Equity 223,291 207,927
------------- -------------
Total
Liabilities
and
Stockholders'
Equity $ 421,466 $ 337,919
============= =============
For investor relations information please contact Mary Pat Thompson Senior Vice President of Finance and Administration, and Chief Financial Officer (208) 955-8930 Email Contact
SOURCE: MWI Veterinary Supply
http://www2.marketwire.com/mw/emailprcntct?id=0B531AAC64E3F3E2
Copyright 2010 Marketwire, Inc., All rights reserved.
News Provided by COMTEX