VCA INC - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - April 28, 2011

Attached files

file filename
8-K - VCA ANTECH, INC. 8-K - VCA INCa6700838.htm

Exhibit 99.1

VCA Antech, Inc. Reports First Quarter 2011 Results and Affirms Financial Guidance for 2011

  • First quarter revenue increase was 7.4% to a first quarter record $355.1 million
  • First quarter diluted earnings per common share of $0.33

LOS ANGELES--(BUSINESS WIRE)--April 28, 2011--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, 2011 as follows: revenue increased 7.4% to a first quarter record of $355.1 million, net income was $28.8 million, and diluted earnings per common share was $0.33.

Bob Antin, Chairman and CEO, stated, “We are pleased that our results for the quarter exceeded our expectations primarily due to better than expected internal growth rates in our Animal Hospital and Laboratory segments. Although the persistent weakness in the economy continues to put pressure on our internal growth rates and our operating results, we are encouraged by the stability we are seeing in our internal growth rates and the sequential improvement in our operating results compared to fourth quarter of 2010.

“Animal Hospital revenue in the first quarter increased 9.4% to $269.9 million driven by acquisitions made in the past twelve months. The combination of a decline in same-store margins due to a decline in same-store revenue and lower margins at acquired animal hospitals has caused our Animal Hospital gross margin to decrease to 14.7% compared to 16.9% for the comparable prior year quarter. Our Animal Hospital operating margin declined to 12.4% compared to 14.6% for the comparable prior year quarter. Our same-store revenue declined by 2.2% and our same-store gross profit margin declined to 14.9% from 16.9%. During the quarter, we acquired two animal hospitals which had historical combined annual revenue of $4.8 million.

“Laboratory revenue in the first quarter increased 1.8% to $79.5 million. Internal revenue growth was 1.7%. Our Laboratory gross profit margin decreased by 50 basis points to 46.2% and our operating margin decreased 110 basis points to 37.8%.

“Medical Technology revenue in the first quarter increased 20.9% to $19.1 million and gross profit decreased 7.7% to $4.5 million. Both our revenue and related cost were impacted by a $4.0 million one-time cumulative adjustment. Gross profit margin was 23.3% compared to 30.6% in the prior year primarily due to the impact of the adjustment mentioned above, in addition to a change in our product mix. The operating margin decreased to 4.7% from 8.1% as SG&A expenses decreased to 18.6% from 22.3%.”

2011 Financial Guidance

While we experienced continued weakness in the first quarter, as noted above, our results for the quarter exceeded our internal budget and we continue to be on track to meet our full year guidance.

Accordingly, we affirm our FY 2011 guidance as follows:

  • Revenue from $1.47 billion to $1.51 billion,
  • Net income from $124.1 million to $132.8 million, and
  • Diluted earnings per common share from $1.42 to $1.52.

The continued uncertainty and lack of visibility regarding the timing and degree of the recovery in our business sector is making it particularly difficult to predict consumer demand for our services and to provide guidance relative to future results. Further, the preceding factors make it more likely that our actual results could differ from expectations.

Conference Call

We will discuss our company’s first quarter 2011 financial results during a conference call today, April 28th, 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) 293-5492. 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 accurately 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 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, 2010 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.

                       
VCA Antech, Inc.
Consolidated Income Statements
(Unaudited)
(In thousands, except per share amounts)
 
Three Months Ended
March 31,
2011 2010
Revenue:
Animal hospital $ 269,941 $ 246,668
Laboratory 79,549 78,180
Medical technology 19,096 15,797
Intercompany   (13,463 )   (9,911 )
  355,123     330,734  
 
Direct costs 275,345 247,939
 
Gross profit:
Animal hospital 39,553 41,677
Laboratory 36,730 36,528
Medical technology 4,458 4,831
Intercompany   (963 )   (241 )
  79,778     82,795  
 
Selling, general and administrative expense:
Animal hospital 6,083 5,587
Laboratory 6,636 6,154
Medical technology 3,556 3,515
Corporate   9,908     10,884  
  26,183     26,140  
 
Loss on sale and disposal of assets   89     25  
 
Operating income 53,506 56,630
 
Interest expense, net 4,019 3,167
Other expense   58     25  

Income before provision for income taxes

49,429 53,438
Provision for income taxes   18,933     20,506  
Net income 30,496 32,932
Net income attributable to noncontrolling interests   1,657     997  
Net income attributable to VCA Antech, Inc. $ 28,839   $ 31,935  
 
Diluted earnings per share $ 0.33   $ 0.37  

Shares used for computing diluted earnings per share

  87,245     86,870  
 
 

 

                       
VCA Antech, Inc.
Consolidated Balance Sheets
(Unaudited)
(In thousands)
 
March 31, December 31,
2011 2010
Assets
 
Current assets:
Cash and cash equivalents $ 130,399 $ 97,126
Trade accounts receivable, net 54,888 49,224
Inventory 43,057 40,760
Prepaid expenses and other 19,349 21,138
Deferred income taxes 18,875 19,019
Prepaid income taxes   8,727   19,047
Total current assets 275,295 246,314
Property and equipment, net 334,343 331,687
Other assets:
Goodwill 1,094,704 1,092,480
Other intangible assets, net 44,940 46,986
Deferred financing costs, net 6,312 6,700
Other   40,256   42,255

Total assets

$ 1,795,850 $ 1,766,422
 
Liabilities and Equity
 
Current liabilities:
Current portion of long-term debt $ 27,753 $ 28,101
Accounts payable 30,710 31,970
Accrued payroll and related liabilities 46,465 35,754
Other accrued liabilities   41,533   45,769
Total current liabilities 146,461 141,594
Long-term debt, less current portion 492,046 498,935
Deferred income taxes 87,616 82,131
Other liabilities 25,906 28,478
Redeemable noncontrolling interest 6,218 5,799
VCA Antech, Inc. stockholders' equity:
Common stock 86 86
Additional paid-in capital 347,619 347,848
Accumulated earnings 679,092 650,253
Accumulated other comprehensive income   1,102   737
Total VCA Antech, Inc. stockholders' equity 1,027,899 998,924
Noncontrolling interest   9,704   10,561
Total equity   1,037,603   1,009,485
Total liabilities and equity $ 1,795,850 $ 1,766,422
 
 
                       
VCA Antech, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
 
Three Months Ended
March 31,
2011 2010
Cash flows from operating activities:
Net income $ 30,496 $ 32,932

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization 13,380 10,707
Amortization of debt costs 388 132
Provision for uncollectible accounts 1,297 1,492
Net loss on sale and disposal of assets 89 25
Share-based compensation 1,068 2,088
Deferred income taxes 8,035 7,232
Excess tax benefit from exercise of stock options (185 ) (264 )
Other (358 ) (114 )
Changes in operating assets and liabilities:
Accounts receivable (6,933 ) (6,511 )
Inventory, prepaid expenses and other assets 1,417 644
Income taxes 9,922 12,527
Accounts payable and other accrued liabilities (8,120 ) (288 )
Accrued payroll and related liabilities   10,734     9,954  
Net cash provided by operating activities   61,230     70,556  
Cash flows from investing activities:
Business acquisitions, net of cash acquired (5,812 ) (9,247 )
Real estate acquired in connection with business acquisitions (1,200 ) (1,300 )
Property and equipment additions (12,034 ) (16,049 )
Proceeds from sale of assets 22 6
Other   (131 )   (61 )
Net cash used in investing activities   (19,155 )   (26,651 )
Cash flows from financing activities:
Repayment of long-term obligations (7,301 ) (10,822 )
Distributions to noncontrolling interest partners (652 ) (989 )
Proceeds from issuance of common stock under stock option plans 1,175 2,858
Repurchase of common stock (2,337 ) (2,253 )
Excess tax benefit from exercise of stock options   185     264  
Net cash used in financing activities   (8,930 )   (10,942 )
Effect of currency exchange rate changes on cash and cash equivalents 128 53
Increase in cash and cash equivalents 33,273 33,016
Cash and cash equivalents at beginning of period   97,126     145,181  
Cash and cash equivalents at end of period $ 130,399   $ 178,197  
 
 

 

                         
VCA Antech, Inc.

Supplemental Operating Data

(Unaudited - In thousands)
 
As of
Table #1 March 31, December 31,
Selected consolidated balance sheet data 2011 2010
 
Debt:
Senior term notes $ 487,500 $ 493,750
Other debt and capital leases   32,299     33,286  
Total debt $ 519,799   $ 527,036  
 
 
Three Months Ended
Table #2 March 31,
Selected expense data 2011 2010
 
Rent expense $ 13,271   $ 12,109  
 

Depreciation and amortization included in direct costs:

Animal hospital $ 9,799 $ 7,279
Laboratory 2,369 2,324
Medical technology 410 374
Intercompany   (301 )   (240 )
12,277 9,737

Depreciation and amortization included in selling, general and administrative expense

  1,103     970  
Total depreciation and amortization $ 13,380   $ 10,707  
 
Share-based compensation included in direct costs:
Laboratory $ 78 $ 161
 

Share-based compensation included in selling, general and administrative expense:

Animal hospital 218 377
Laboratory 240 315
Medical technology 55 77
Corporate   477     1,158  
  990     1,927  
Total share-based compensation $ 1,068   $ 2,088  

CONTACT:
VCA Antech, Inc.
Tomas Fuller
Chief Financial Officer
(310) 571-6505

Stock widget

Investing forum

VCA INC Reports