MWI Veterinary Supply
) reported fourth quarter 2012 earnings per share (EPS) of 99
cents. The result surpassed the Zacks Consensus Estimate of 97
and increased 23.8% year over year. The company also reported a
robust 24.4% increase in fiscal 2012 EPS to $4.23, which was
ahead of the Zacks Consensus Estimate by 2 cents.
Revenues in the reported quarter were $551.4 million, which
comfortably surpassed the Zacks Consensus Estimate of $537
million and increased 30.9% year over year. For the full
year, total revenues climbed 32.6% from the year-ago period to
$2.08 billion, beating the Zacks Consensus Estimate of $2.06
Excluding the acquisition of Micro Beef Technologies (acquired
on October 31 2011), the company's organic revenue for the
quarter grew 13.8% in the U.S. Revenues from the Micro Beef
acquisition were $68.4 million, down 1% sequentially. In UK,
revenue increased 18.6% year over year, including 21.0% organic
growth, partially offset by a 2.4% decline related to foreign
Commissions plunged 12.0% year over year to $4.3 million,
negatively impacted by the loss of a pet food line in fiscal 2012
along with a shift in commission terms for some parasiticides. In
the reported quarter, Internet sales to independent veterinary
practices and producers in the U.S. grew 29.1% year over year.
Veterinary pharmacy programs revenues increased roughly 36% to
Gross profit increased 35.3% to $68.3 million during the
quarter. Gross margin expanded 40 basis points (bps) year over
year to 12.4% led by higher product margin and improved freight
as a percentage of total revenue, partially offset by a decline
In the reported quarter, MWI Vet's operating income increased
26.3% to $19.7 million. However, with a 38.2% rise in selling,
general and administrative (SG&A) expenses to $46.3 million,
operating margin dipped 12 bps to 3.9% during the quarter.
The huge increase in SG&A expenses was based on the
addition of Micro Beef and the added support for the company's
revenue growth. SG&A expenses, as a percentage of sales, were
up 40 bps to 8.4% during the reported quarter.
MWIV exited the fiscal with cash balance of $514,000 compared
with $606,000 at the end of fiscal 2011. On September 30, 2012,
the company had $48.1 million on its credit facilities compared
with $45.2 million at the end of September 30, 2011. The increase
in outstanding on credit facility was primarily the result of the
acquisition of Micro Beef assets.
MWIV provided its guidance for fiscal 2013. The company
expects to report revenues of $2.285-$2.335 billion representing
annualized growth of 10.1−12.5%. The company also expects EPS to
be in the range of $4.66- $4.80 with annualized growth of
10.2−13.5% in 2013. The company's revenues and EPS guidance are
in line with the current Zacks Consensus Estimates of $2.285
billion and $4.73 per share, respectively.
We are encouraged with MWI Vet's better-than-expected fourth
quarter and fiscal 2012 results and an encouraging fiscal 2013
guidance, with the growth momentum maintained by the company over
the past few years. In a highly fragmented animal health products
distribution market, MWI Vet is currently focused on preserving
long-term customer relationships as well as building new ones.
The company's recently formed distribution deal with
point-of-care blood analysis systems manufacturer
) to store, market and promote the entire veterinary product line
of Abaxis in the U.S., is expected to be an important milestone
for the company's growth.
MWI Vet has witnessed substantial market share gains amid a
low-growth environment. However, the company faces stiff
competition from key players like
), among others. Presently, MWI Vet retains a short-term Zacks #2
Rank (Buy). However, over the long term, we have a 'Neutral'
recommendation on the stock.
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MWI VET SUPPLY (MWIV): Free Stock Analysis
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