- First quarter revenue increased 4.7% to $330.7 million
- First quarter gross profit increased to $82.8 million
- First quarter diluted earnings per common share remained flat at $0.37
LOS ANGELES, April 26, 2010 (GLOBE NEWSWIRE) -- VCA Antech, Inc. (Nasdaq:WOOF), a leading animal healthcare company in the United States, today reported financial results for the first quarter ended March 31, 2010 as follows: revenue increased 4.7% to a first quarter record of $330.7 million; gross profit increased to $82.8 million and diluted earnings per common share of $0.37.
Bob Antin, Chairman and CEO, stated, "We experienced relative improvement in our revenue growth rate in comparison to the previous four quarters. We continued to recover from the effects of the economic recession; however, we were confronted with record snowfall throughout the East Coast during February which impacted both our Animal Hospital and Laboratory business segments. As the economy continues to improve, we remain optimistic with respect to our results for the remainder of 2010.
"Animal hospital revenue in the first quarter increased 3.5% to $246.7 million driven by acquisitions made in the past twelve months. The combination of lower margins at acquired animal hospitals, and a decline in same-store margins due to a decline in same-store revenue, has caused our animal hospital gross margin to decrease to 16.9% compared to 18.1% for the comparable prior year quarter, and our animal hospital operating margin to decline to 14.6% compared to 16.0% for the comparable prior year quarter. Our same-store revenue declined by 1.6% and our same-store gross profit margin declined to 17.4% from 18.3%. We acquired four animal hospitals during the quarter with historical combined annual revenue of $9.0 million.
"Laboratory revenue in the first quarter increased 0.4% to $78.2 million with internal revenue growth of 0.2%. Our laboratory gross profit increased 1.4% to $36.5 million. Our laboratory gross profit margin and operating margin were essentially flat at 46.7% and 38.9%, respectively, for the current and comparable prior year quarters.
"Sound-Eklin revenue in the first quarter increased 79.8% to $15.8 million and gross profit increased 49.7% to $4.8 million. Gross profit margin was 30.6% compared to 36.7% in the prior year primarily due to product mix and the operating margin increased to 8.1% from 4.7%."
2010 Financial Guidance
We affirm our 2010 financial guidance as follows:
- Revenue from $1.39 billion to $1.42 billion;
- Net income from $140.0 million to $147.2 million; and
- Diluted earnings per common share from $1.60 to $1.68.
Current uncertainty in the economy and the lack of visibility regarding the timing and degree of any recovery in our business sector makes it particularly difficult to predict consumer demand for our services and makes it more likely that our actual results could differ materially from expectations. Our senior term notes are scheduled to mature in 2011, although they may be refinanced in 2010. The guidance above is based upon our current capital structure and, accordingly, does not include the effect of any debt refinancing.
Conference Call
We will discuss our company's first quarter 2010 financial results during a conference call today, April 26th, at 4:30 p.m. Eastern Time. You can access a live broadcast of the call by visiting our website at http://investor.vcaantech.com. You can also access the call by dialing (877) 280-7473. Interested parties should call at least 10 minutes prior to the start of the call to register.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may and likely will differ materially from this forward-looking information. Our animal hospital and laboratory revenues have been materially adversely impacted by the current economic recession. We are unable to forecast the timing or degree of any economic recovery. Further, trends in the general economy may not be reflected in our business at the same time or in the same degree as in the general economy. The timing and degree of any economic recovery, and its impact on our business, are among the important factors that could cause actual results to differ from this forward-looking information. Among other factors that could cause our actual results to differ from this forward-looking information are: an increase in the level of direct costs or a failure to increase revenue at a level necessary to maintain our expected operating margins, a material adverse change in our financial condition or operations; the level of selling, general and administrative costs; the effects of our recent and future acquisitions (including Eklin Medical Systems, Inc.) and our ability to effectively manage our growth and achieve operating synergies; a decline in demand for any of our products and services; any disruption in our information technology systems or transportation networks; the effects of competition; any impairment in the carrying value of our goodwill and other intangible assets; changes in prevailing interest rates; our ability to service our debt; and general economic conditions. These and other risks are discussed in our Report on Form 10-K for the year ended December 31, 2009 and the reader is directed to these statements for a further discussion of important factors that could cause actual results to differ materially from those in the forward-looking statements.
We own, operate and manage the largest networks of freestanding veterinary hospitals and veterinary-exclusive clinical laboratories in the country, and we supply diagnostic imaging equipment to the veterinary industry.
The VCA Antech, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=4252
| VCA Antech, Inc. | ||
| Consolidated Income Statements | ||
| (Unaudited) | ||
| (In thousands, except per share amounts) | ||
| Three Months Ended | ||
| March 31, | ||
| 2010 | 2009 | |
| Revenue: | ||
| Animal hospital | $ 246,668 | $ 238,358 |
| Laboratory | 78,180 | 77,862 |
| Medical technology | 15,797 | 8,785 |
| Intercompany | (9,911) | (9,155) |
| 330,734 | 315,850 | |
| Direct costs | 247,939 | 233,681 |
| Gross profit: | ||
| Animal hospital | 41,677 | 43,164 |
| Laboratory | 36,528 | 36,031 |
| Medical technology | 4,831 | 3,228 |
| Intercompany | (241) | (254) |
| 82,795 | 82,169 | |
| Selling, general and administrative expense: | ||
| Animal hospital | 5,587 | 5,384 |
| Laboratory | 6,154 | 5,567 |
| Medical technology | 3,515 | 2,812 |
| Corporate | 10,884 | 9,154 |
| 26,140 | 22,917 | |
| Loss (gain) on sale and disposal of assets | 25 | (248) |
| Operating income | 56,630 | 59,500 |
| Interest expense, net | 3,167 | 6,118 |
| Other expense (income) | 25 | (110) |
| Income before provision for | ||
| income taxes | 53,438 | 53,492 |
| Provision for income taxes | 20,506 | 20,611 |
| Net income | 32,932 | 32,881 |
| Net income attributable to noncontrolling interests | 997 | 911 |
| Net income attributable to VCA Antech, Inc. | $ 31,935 | $ 31,970 |
| Diluted earnings per share | $ 0.37 | $ 0.37 |
| Shares used for computing diluted | ||
| earnings per share | 86,870 | 85,386 |
| VCA Antech, Inc. | ||
| Consolidated Balance Sheets | ||
| (Unaudited) | ||
| (In thousands) | ||
| March 31, | December 31, | |
| 2010 | 2009 | |
| Assets | ||
| Current assets: | ||
| Cash and cash equivalents | $ 178,197 | $ 145,181 |
| Trade accounts receivable, net | 54,276 | 49,186 |
| Inventory | 32,489 | 32,031 |
| Prepaid expenses and other | 24,516 | 27,242 |
| Deferred income taxes | 18,797 | 18,318 |
| Prepaid income taxes | -- | 6,252 |
| Total current assets | 308,275 | 278,210 |
| Property and equipment, net | 298,840 | 289,415 |
| Other assets: | ||
| Goodwill | 995,123 | 985,674 |
| Other intangible assets, net | 43,345 | 44,280 |
| Deferred financing costs, net | 449 | 581 |
| Other | 31,653 | 29,244 |
| Total assets | $ 1,677,685 | $ 1,627,404 |
| Liabilities and Equity | ||
| Current liabilities: | ||
| Current portion of long-term obligations | $ 8,721 | $ 17,195 |
| Accounts payable | 30,333 | 28,326 |
| Accrued payroll and related liabilities | 43,493 | 33,539 |
| Income taxes payable | 6,514 | -- |
| Other accrued liabilities | 40,541 | 43,298 |
| Total current liabilities | 129,602 | 122,358 |
| Long-term obligations, less current portion | 525,558 | 527,860 |
| Deferred income taxes | 85,640 | 75,197 |
| Other liabilities | 10,422 | 10,651 |
| VCA Antech, Inc. stockholders' equity: | ||
| Common stock | 86 | 86 |
| Additional paid-in capital | 337,569 | 335,114 |
| Retained earnings | 571,945 | 540,010 |
| Accumulated other comprehensive income (loss) | 347 | (163) |
| Total VCA Antech, Inc. stockholders' equity | 909,947 | 875,047 |
| Noncontrolling interest | 16,516 | 16,291 |
| Total equity | 926,463 | 891,338 |
| Total liabilities and equity | $ 1,677,685 | $ 1,627,404 |
| VCA Antech, Inc. | ||
| Consolidated Statements of Cash Flows | ||
| (Unaudited) | ||
| (In thousands) | ||
| Three Months Ended | ||
| March 31, | ||
| 2010 | 2009 | |
| Cash flows from operating activities: | ||
| Net income | $ 32,932 | $ 32,881 |
| Adjustments to reconcile net income to net cash provided by | ||
| operating activities: | ||
| Depreciation and amortization | 10,707 | 9,152 |
| Amortization of debt costs | 132 | 120 |
| Provision for uncollectible accounts | 1,492 | 1,559 |
| Net loss (gain) on sale and disposal of assets | 25 | (248) |
| Share-based compensation | 2,088 | 1,976 |
| Deferred income taxes | 7,232 | 5,304 |
| Excess tax benefit from exercise of stock options | (264) | -- |
| Other | (114) | (148) |
| Changes in operating assets and liabilities: | ||
| Accounts receivable | (6,511) | (5,455) |
| Inventory, prepaid expenses and other assets | 644 | (2,790) |
| Accounts payable and other accrued liabilities | (288) | (2,362) |
| Accrued payroll and related liabilities | 9,954 | (3,204) |
| Prepaid income taxes | 12,527 | 14,413 |
| Net cash provided by operating activities | 70,556 | 51,198 |
| Cash flows from investing activities: | ||
| Business acquisitions, net of cash acquired | (9,247) | (14,467) |
| Real estate acquired in connection with business acquisitions | (1,300) | (963) |
| Property and equipment additions | (16,049) | (12,886) |
| Proceeds from sale of assets | 6 | 74 |
| Other | (61) | (373) |
| Net cash used in investing activities | (26,651) | (28,615) |
| Cash flows from financing activities: | ||
| Repayment of debt | (10,822) | (1,946) |
| Distributions to noncontrolling interest partners | (989) | (888) |
| Proceeds from issuance of common stock under stock option plans | 2,858 | 557 |
| Repurchase of common stock | (2,253) | (180) |
| Excess tax benefit from exercise of stock options | 264 | -- |
| Net cash used in financing activities | (10,942) | (2,457) |
| Effect of currency exchange rate changes on cash and cash equivalents | 53 | (1) |
| Increase in cash and cash equivalents | 33,016 | 20,125 |
| Cash and cash equivalents at beginning of period | 145,181 | 88,959 |
| Cash and cash equivalents at end of period | $ 178,197 | $ 109,084 |
| VCA Antech, Inc. | ||
| Supplemental Operating Data | ||
| (Unaudited - In thousands) | ||
| As of | ||
| Table #1 | March 31, | December 31, |
| Selected consolidated balance sheet data | 2010 | 2009 |
| Debt: | ||
| Revolving credit facility | $ -- | $ -- |
| Senior term notes | 506,773 | 516,889 |
| Other debt and capital leases | 27,506 | 28,166 |
| Total debt | $ 534,279 | $ 545,055 |
| Three Months Ended | ||
| Table #2 | March 31, | |
| Selected expense data | 2010 | 2009 |
| Rent expense | $ 12,109 | $ 11,410 |
| Depreciation and amortization included | ||
| in direct costs: | ||
| Animal hospital | $ 7,279 | $ 6,219 |
| Laboratory | 2,324 | 2,180 |
| Medical technology | 374 | 196 |
| Intercompany | (240) | (187) |
| 9,737 | 8,408 | |
| Depreciation and amortization included | ||
| in selling, general and administrative | ||
| expense | 970 | 744 |
| Total depreciation and amortization | $ 10,707 | $ 9,152 |
| Share-based compensation included in | ||
| direct costs: | ||
| Laboratory | $ 161 | $ 155 |
| Share-based compensation included in | ||
| selling, general and administrative expense: | ||
| Animal hospital | 377 | 371 |
| Laboratory | 315 | 301 |
| Medical technology | 77 | 75 |
| Corporate | 1,158 | 1,074 |
| 1,927 | 1,821 | |
| Total share-based compensation | $ 2,088 | $ 1,976 |