MWI Veterinary Supply
) reported second-quarter fiscal 2013 earnings per share (EPS) of
$1.19, up 4.4% on a year-over-year basis. The result also
surpassed the Zacks Consensus Estimate of $1.17, representing the
sixth successive quarterly earnings beat for MWI Vet.
Revenues increased 11% year over year to $563.1 million in the
second quarter. Despite challenging conditions in end markets,
MWI Vet posted double-digit revenue growth. Moreover, initial
results from the diagnostic line are also encouraging. However,
the result was well behind the Zacks Consensus Estimate of $571
Revenue growth in the U.S. was 10.7% on a year-over-year basis
with about 9% organic growth. In the U.S., Internet sales to
independent veterinary practices and producers rose 22% year over
year. U.K. witnessed revenue growth of 13.2%, based on organic
revenue growth of 14.4% in the region and unfavorable foreign
exchange impact of 1.2%.
Commissions increased 16.2% year over year to $5.1 million on
the back of external incentives. Vendor rebates surged $991,000
from the year-ago period on the heels of revenue growth and
timing of manufacturing programs.
Gross profit improved 12.1% to $74.7 million in the quarter.
As a result, gross margin expanded 20 basis points (bps) year
over year to 13.3% in the quarter due to higher vendor
Despite the absolute increase in SG&A expenses due to the
addition of Micro, it remained flat as a percentage of sales at
8.5% in the quarter. However, MWI Vet's operating income climbed
13.2% to $24.2 million. As a result, operating margin expanded 10
bps to 4.3% in the reported quarter.
MWI Vet exited the second quarter with cash balance of
$452,000 compared with $514,000 at the end of fiscal
As of Mar 31, 2013, the company had $64 million on its credit
facilities compared with $48.1 million as of Sep 30, 2012. The
increase was primarily due to the acquisition of PCI Animal
Health in the first quarter.
Following a strong second quarter, MWI Vet revised its
guidance for fiscal 2013. The company now expects to report
revenues of $2.32-$2.36 billion compared with the prior outlook
of $2.31-$2.36 billion. The updated outlook reflects annualized
growth of 11.8% to 13.7%. The current Zacks Consensus Estimate of
$2.37 billion lies outside the guidance range.
MWI Vet presently envisages EPS in the range of $4.79-$4.89
compared with $4.73-$4.87 earlier, with annualized growth of
13.2%−15.6% for the ongoing fiscal. The current Zacks Consensus
Estimate of $4.86 is within the company's guidance range.
Even amid a low-growth environment, MWI Vet continues to post
double-digit growth as reflected in its second quarter earnings,
which surpassed the Zacks Consensus Estimate. However, the
challenging scenario in the animal health market led to a
sequential slowdown in revenues which missed our
Nonetheless, margin expansion and higher vendor rebates are
material upsides in the reported quarter. Evidently, MWI Vet has
the strength to deliver consistent growth performance going
Currently, the stock carries a Zacks Rank #2 (Buy). Other
Zacks Rank #2 healthcare stocks are
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MWI VET SUPPLY (MWIV): Free Stock Analysis
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