MWI Veterinary Supply Announces 2013 Second Quarter Results and Updates Its 2013 Business Outlook

Marketwired

BOISE, ID--(Marketwired - May 2, 2013) - MWI Veterinary Supply, Inc. (NASDAQ: MWIV) (the "Company") announced financial results today for its second quarter ended March 31, 2013.

Highlights:

  • Total revenues were $563.1 million for the quarter, 11.0% higher than revenues for the same period in the prior fiscal year. Revenue growth was 10.7% in the United States and 13.2% in the United Kingdom for the quarter compared to the same period in the prior fiscal year.
  • Gross profit as a percentage of total revenues improved to 13.3% for the quarter, compared to 13.1% for the same period in the prior fiscal year.
  • Operating income was $24.2 million for the quarter, 13.2% higher than operating income for the same period in the prior fiscal year. Operating income as a percentage of total revenues improved to 4.3% for the quarter, compared to 4.2% for the same period in the prior fiscal year.
  • Net income was $15.1 million for the quarter, 14.6% higher than net income for the same period in the prior fiscal year. Diluted earnings per share were $1.19 for the quarter, compared to $1.04 for the same period in the prior fiscal year.
  • Internet sales to independent veterinary practices and producers in the United States grew by approximately 22% for the quarter compared to the same period in the prior fiscal year.
  • Product training, customer reception and our sales results were very successful for both new and existing diagnostic lines.

"Our results for the quarter were impressive in spite of some of the challenging economic conditions in the animal health industry," said Jim Cleary, President and Chief Executive Officer. "Our revenue growth was strong and our gross profit as a percentage of total revenues exceeded our expectations. We are very pleased with the initial results from the diagnostic lines and are now the only distributor to carry all of these products. The success we had this quarter is due in large part to the tremendous efforts by our team members and the service they provide to our customers."

Quarter ended March 31, 2013 compared to quarter ended March 31, 2012

Total revenues increased 11.0% to $563.1 million for the quarter ended March 31, 2013, compared to $507.2 million for the quarter ended March 31, 2012. Revenue growth in the United States was 10.7% for the quarter ended March 31, 2013, compared to the quarter ended March 31, 2012. Revenue growth in the United Kingdom was 13.2% for the quarter ended March 31, 2013, consisting of 14.4% organic growth reduced by 1.2% related to foreign currency translation. Commissions increased 16.2% to $5.1 million for the quarter ended March 31, 2013, compared to $4.4 million for the quarter ended March 31, 2012.

Gross profit increased by 12.1% to $74.7 million for the quarter ended March 31, 2013, compared to $66.6 million for the quarter ended March 31, 2012. Gross profit as a percentage of total revenues improved to 13.3% for the quarter ended March 31, 2013, compared to 13.1% for the quarter ended March 31, 2012 due to an improvement in vendor rebates as a percentage of total revenues. Vendor rebates for the quarter ended March 31, 2013 increased by approximately $991,000 compared to the quarter ended March 31, 2012 primarily due to the growth in revenues and timing of manufacturer programs.

Operating income increased 13.2% to $24.2 million for the quarter ended March 31, 2013, compared to $21.4 million for the quarter ended March 31, 2012. SG&A expenses increased 11.6% to $47.9 million for the quarter ended March 31, 2013, compared to $42.9 million for the quarter ended March 31, 2012. SG&A expenses as a percentage of total revenues were 8.5% for each of the quarters ended March 31, 2013 and 2012. The increase in SG&A expenses was primarily due to an increase in compensation and benefit costs.

Net income increased 14.6% to $15.1 million for the quarter ended March 31, 2013, compared to $13.2 million for the quarter ended March 31, 2012. Diluted earnings per share were $1.19 and $1.04 for the quarter ended March 31, 2013 and 2012, respectively, an increase of 14.4%.

Six months ended March 31, 2013 compared to six months ended March 31, 2012

Total revenues increased 17.2% to $1.136 billion for the six months ended March 31, 2013, compared to $969.1 million for the six months ended March 31, 2012. Excluding the revenues resulting from the acquisition of the assets of Micro during the month of October 2012, revenue growth in the United States was 13.5% for the six months ended March 31, 2013, compared to the six months ended March 31, 2012. We acquired the assets of Micro on October 31, 2011, and therefore did not own Micro for one month of the comparable six month period in the prior fiscal year. Revenues resulting from the acquisition of Micro were $28.7 million during the month of October 2012. Revenue growth in the United Kingdom was 18.7% for the six months ended March 31, 2013, consisting of 18.0% organic growth and 0.7% related to foreign currency translation. Commissions increased 16.2% to $9.5 million for the six months ended March 31, 2013, compared to $8.1 million for the six months ended March 31, 2012.

Gross profit increased by 17.4% to $151.6 million for the six months ended March 31, 2013, compared to $129.1 million for the six months ended March 31, 2012. Gross profit as a percentage of total revenues was 13.3% for each of the six months ended March 31, 2013 and 2012 due to a decrease in product margin, offset by an improvement in freight and vendor rebates as a percentage of total revenues. Vendor rebates for the six months ended March 31, 2013 increased by approximately $3.9 million compared to the six months ended March 31, 2012 primarily due to the growth in revenues and timing of manufacturer programs.

Operating income increased 19.8% to $51.3 million for the six months ended March 31, 2013, compared to $42.8 million for the six months ended March 31, 2012. SG&A expenses increased 16.6% to $95.4 million for the six months ended March 31, 2013, compared to $81.8 million for the six months ended March 31, 2012. SG&A expenses as a percentage of total revenues were 8.4% for each of the six months ended March 31, 2013 and 2012. The increase in SG&A expenses was primarily due to an increase in compensation and benefit costs and Micro expenses for the month of October 2012.

Net income increased 20.8% to $31.9 million for the six months ended March 31, 2013, compared to $26.4 million for the six months ended March 31, 2012. Diluted earnings per share were $2.51 and $2.09 for the six months ended March 31, 2013 and 2012, respectively, an increase of 20.1%.

As of March 31, 2013, we had $64.0 million outstanding on our credit facilities after acquiring PCI Animal Health for approximately $17 million on December 31, 2012.

Business Outlook

The Company estimates that for the fiscal year ending September 30, 2013, revenues will be from $2.320 billion to $2.360 billion, which represents growth of 11.8% to 13.7% compared to revenues in fiscal year 2012. The Company estimates that diluted earnings per share will be from $4.79 to $4.89 per share, which represents growth of 13.2% to 15.6% compared to diluted earnings per share in fiscal year 2012. The Company's previous guidance for the fiscal year ending September 30, 2013 was revenues from $2.310 billion to $2.360 billion and diluted earnings per share of $4.73 to $4.87. 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 May 2, 2013 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 May 9, 2013 by calling (855) 859-2056 for calls within the United States or (404) 537-3406 for international calls using the passcode 50878516. 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 contracts or rebate programs; exclusivity requirements with certain vendors that may prohibit us from distributing competing products manufactured by other vendors or margin reductions if we become a non-exclusive distributor; transitional challenges associated with acquisitions, including the failure to achieve anticipated synergies; vendor rebates based upon attaining certain growth goals; changes in the way vendors introduce/deliver products to market; a disruption caused by adverse weather (i.e. drought) or other natural conditions or disasters; possible changes in the use of feed additives (antibiotics, growth promotants) used in the production animal markets due to trade restrictions, consumer concern and/or government regulations; seasonality; unforeseen litigation; risks associated with our international operations; financial risks associated with acquisitions and investments; 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 or price changes offered by our vendors; the timing of the introduction of new products and services by our vendors; our intellectual property rights may be inadequate to protect our business; 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; 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   Quarter Ended March 31,   Six Months Ended March 31,
Statements of Income   2013   2012   2013   2012
Revenues   $ 563,114     $ 507,170     $ 1,135,962     $ 969,071  
Cost of product sales     488,435       440,552       984,354       839,939  
Gross profit     74,679       66,618       151,608       129,132  
Selling, general and administrative expenses     47,928       42,933       95,388       81,840  
Depreciation and amortization     2,513       2,274       4,905       4,466  
Operating income     24,238       21,411       51,315       42,826  
Interest expense     (223 )     (252 )     (426 )     (435 )
Other income     294       265       591       530  
Income before taxes     24,309       21,424       51,480       42,921  
Income tax expense     (9,209 )     (8,246 )     (19,629 )     (16,547 )
Net income   $ 15,100     $ 13,178     $ 31,851     $ 26,374  
                                 
Net income per share - diluted   $ 1.19     $ 1.04     $ 2.51     $ 2.09  
Weighted average common shares outstanding - diluted     12,709       12,648       12,702       12,626  
                                 
                      March 31,       September 30,  
Condensed Consolidated Balance Sheets                     2013       2012  
Assets                                
  Cash                   $ 452     $ 514  
  Receivables, net                     303,555       288,922  
  Inventories                     268,678       251,375  
  Prepaid expenses and other current assets                     6,828       10,094  
  Deferred income taxes                     2,586       1,580  
    Total current assets                     582,099       552,485  
                                 
  Property and equipment, net                     37,348       35,784  
  Goodwill                     70,474       61,841  
  Intangibles, net                     41,185       38,706  
  Other assets, net                     7,837       7,567  
    Total Assets                   $ 738,943     $ 696,383  
                                 
Liabilities                                
  Credit facilities                   $ 63,954     $ 48,080  
  Accounts payable                     256,035       258,741  
  Accrued expenses and other current liabilities                     18,048       19,952  
  Current portion of capital lease obligations                     196       337  
    Total current liabilities                     338,233       327,110  
                                 
  Deferred income taxes                     7,932       7,180  
  Long-term debt and capital lease obligations                     39       104  
  Other long-term liabilities                     2,308       2,687  
                                 
Stockholders' Equity                     390,431       359,302  
                                 
  Total Liabilities and Stockholders' Equity                   $ 738,943     $ 696,383  
                                   
                                   
Contact:
Mary Pat Thompson
Senior Vice President of Finance and Administration, and Chief Financial Officer
(208) 955-8930
Email Contact
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