UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C.
20549
______________
Form 8-K
CURRENT
REPORT
Pursuant
to
Section 13 or 15(d) of the Securities Exchange Act of 1934
Date
of Report (Date of earliest event reported): February
11, 2015
VCA Inc.
(Exact
Name of Registrant as Specified in Charter)
Delaware
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001-16783
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95-4097995
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(State or Other Jurisdiction
of Incorporation)
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(Commission
File Number)
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(IRS Employer
Identification No.)
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12401 West Olympic Boulevard Los Angeles, California 90064-1022
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(Address of Principal Executive Offices)
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(310) 571-6500
(Registrant’s Telephone Number)
Check the
appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any
of the following provisions:
⃞
Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
⃞
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
⃞
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
⃞
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
Item 2.02: Results of Operations and Financial Condition
On February 11, 2015, VCA Inc. issued a press release which included
earnings for the fourth quarter and fiscal year 2014. A copy of the
press release is furnished as Exhibit 99.1 to this Form 8-K.
Item 9.01: Financial Statements, Pro Forma Financial Information and
Exhibits
(c) Exhibits
99.1 Press release dated February 11, 2015, regarding earnings
for the fourth quarter and fiscal year 2014.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
February 11, 2015
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VCA Inc.
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/s/ Tomas W. Fuller
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By:
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Tomas W. Fuller
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Its:
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Chief Financial Officer
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EXHIBIT INDEX
Exhibits
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99.1
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Press release dated February 11, 2015, regarding earnings for the
fourth quarter and fiscal year 2014.
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4
Exhibit 99.1
VCA Inc.
Reports Fourth Quarter 2014 Results and Provides Financial Guidance for
2015
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Revenue
increased 10.2% to a fourth quarter record of $479.9 million
-
Gross
profit increased 13.2% to $99.0 million
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Operating
income increased 14.7% to $52.7 million
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Diluted
earnings per common share increased 17.9% to $0.33
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Non-GAAP
diluted earnings per common share increased 19.4% to $0.37
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Acquired
a quarterly record 24 independent animal hospitals
LOS ANGELES--(BUSINESS WIRE)--February 11, 2015--VCA Inc. (NASDAQ:
WOOF), a leading animal healthcare company in the United States and
Canada, today reported financial results for the fourth quarter ended
December 31, 2014, as follows: revenue increased 10.2% to a fourth
quarter record of $479.9 million, gross profit increased 13.2% to $99.0
million, operating income increased 14.7% to $52.7 million, net income
increased 16.3% to $29.9 million, and diluted earnings per common share
increased 17.9% to $0.33. Non-GAAP diluted earnings per common share,
which excludes acquisition-related amortization, increased 19.4% to
$0.37.
We also reported our financial results for the twelve months ended
December 31, 2014, as follows: revenue increased 6.4% to $1.9 billion,
gross profit increased 8.6% to $444.6 million, operating income
decreased 0.7% to $247.3 million, net income decreased 1.6% to $140.7
million, and diluted earnings per common share increased 0.7% to $1.54.
Our financial results for the twelve months ended December 31, 2014, on
a Non-GAAP basis, are as follows: gross profit increased 8.7% to $465.4
million, operating income increased 9.6% to $295.3 million, net income
increased 10.3% to $166.3 million, and Non-GAAP diluted earnings per
common share increased 12.5% to $1.89.
Our financial results for the twelve months ended December 31, 2014,
included a non-cash impairment charge of $27.0 million, $17.0 million
net of tax, or $0.19 per diluted common share, related to the write-down
of goodwill and other long-lived assets in our Vetstreet business,
included in our All Other segments category. Our results also included
debt retirement costs of $1.7 million, $1.0 million net of tax, or $0.01
per common share, related to the refinancing of our senior credit
facility. Our results for the twelve months ended December 31, 2013,
included charges of $3.8 million, $2.3 million net of tax, or $0.03 per
diluted common share, related to vacated properties that were
consolidated into the then newly constructed VCA West Los Angeles Animal
Hospital, as well as a non-cash inventory credit adjustment of $2.8
million, $1.7 million net of tax, or $0.02 per diluted common share.
Bob Antin, Chairman and CEO, stated, “We had another terrific quarter.
We experienced solid internal revenue growth of 4.4% and 5.1% in our
core Animal Hospital and Laboratory business segments, respectively. Our
same-store Animal Hospital gross profit margins increased 80 basis
points and our Laboratory gross profit margins increased an impressive
170 basis points. The positive momentum in our business has continued
from the third quarter to the end of the year and we are optimistic
about our overall growth prospects in 2015.
“Animal Hospital revenue in the fourth quarter of 2014 increased 10.9%
to $380.7 million, driven by acquisitions made in the past twelve months
and same-store revenue growth of 4.4%. Our same-store gross profit
margin increased to 13.5% from 12.7% and our total gross margin
increased to 13.2% from 12.5% in the prior-year quarter. During the
quarter, we acquired a record 24 independent animal hospitals which had
historical combined annual revenue of $68.5 million, bringing our year
to date total to $122.5 million.
“Laboratory internal revenue in the fourth quarter of 2014 increased
5.1% to $83.9 million, driven by an increase in the average revenue per
requisition of 5.2%. Our Laboratory gross profit margin increased to
46.0% from 44.3% and our operating margin increased to 35.8% from 34.4%.
“During the fourth quarter, we purchased 2.6 million shares of our
common stock for $112.8 million. Since the Board authorized our share
repurchase program, we have acquired 7.4 million shares of our common
stock for $278.5 million from April 2013 through December 31, 2014."
2015 Financial Guidance
We provide the following financial guidance for the full year 2015:
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Revenue from $2.08 billion to $2.09 billion;
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Net income from $166 million to $175 million;
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Diluted earnings per common share from $2.00 to $2.10; and
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Non-GAAP diluted earnings per common share from $2.17 to $2.27.
Non-GAAP Financial Measures
We believe investors’ understanding of our total performance is enhanced
by disclosing Non-GAAP financial measures including Non-GAAP net income,
Non-GAAP gross profit, Non-GAAP operating income and Non-GAAP diluted
earnings per common share. We define these adjusted measures as the
reported amounts, adjusted to exclude certain significant items and
amortization of intangibles acquired in acquisitions.
Management believes these adjusted measures are useful to management and
investors in evaluating the Company's operational performance and their
use provides an additional tool for evaluating the Company's operating
results and trends. As a result, these Non-GAAP financial measures help
to provide meaningful comparisons of our overall performance from one
reporting period to another and meaningful assessments of related trends.
There is a material limitation associated with the use of these Non-GAAP
financial measures: our adjusted measures exclude the impact of these
significant items, and as a result, our computation of adjusted diluted
earnings per common share does not depict diluted earnings per common
share in accordance with GAAP.
To compensate for the limitations in the Non-GAAP financial measures
discussed above, our disclosures provide a complete understanding of all
adjustments found in Non-GAAP financial measures, and we reconcile the
Non-GAAP financial measures to the GAAP financial measures in the
attached financial schedules titled “Supplemental Operating Data.”
Conference Call
We will discuss our fourth quarter 2014 financial results during a
conference call today, February 11th, at 9:00 a.m. Eastern
Time. A live broadcast of the call may be accessed by visiting our
website at investor.vca.com. The call may also be accessed by dialing
(877) 293-5492. Interested parties should call at least ten minutes
prior to the start of the call to register. Replay of the webcast will
be available for ninety days by visiting the company's website.
Forward-Looking Statements
This press release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. Among
the forward-looking statements in this press release are 2015 Financial
Guidance and other statements addressing our plans, expectations, future
financial position and results of operation. These forward-looking
statements are not historical facts and are inherently uncertain and out
of our control. Any or all of our forward-looking statements in this
press release may turn out to be wrong. They can be affected by
inaccurate assumptions we might make or by known or unknown risks and
uncertainties. Actual future results may vary materially. Among other
factors that could cause our actual results to differ from this
forward-looking information are: our ability to execute on our growth
strategy and to manage acquired operations; changes in demand for our
products and services; fluctuations in our revenue adversely affecting
our gross profit, operating income and margins; and the effects of the
other factors discussed in our Annual Report on Form 10-K for the year
ended December 31, 2013, reports on Form 10-Q and our other filings with
the SEC.
About VCA Inc.
We own, operate and manage the largest network of freestanding
veterinary hospitals and veterinary-exclusive clinical laboratories in
the country, additionally we are the largest provider of online
communication, professional education and marketing solutions to the
veterinary community. We also supply diagnostic imaging equipment to the
veterinary industry.
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VCA Inc.
Condensed, Consolidated Income Statements
(Unaudited)
(In thousands, except per share amounts)
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Three Months Ended December 31,
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Twelve Months Ended December 31,
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2014
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2013
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2014
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2013
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Revenue:
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Animal hospital
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$
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380,694
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$
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343,220
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$
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1,514,878
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$
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1,417,908
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Laboratory
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84,004
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79,806
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360,396
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344,831
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All other
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33,871
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29,283
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115,785
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112,740
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Intercompany
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(18,642
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(16,856
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(72,576
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(72,110
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)
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479,927
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435,453
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1,918,483
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1,803,369
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Direct costs
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380,909
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347,967
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1,473,842
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1,393,989
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Gross profit:
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Animal hospital
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50,128
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42,976
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230,801
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209,127
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Laboratory
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38,661
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35,378
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175,808
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163,879
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All other
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10,871
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9,538
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38,624
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38,601
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Intercompany
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(642
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)
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(406
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)
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(592
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)
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(2,227
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)
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99,018
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87,486
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444,641
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409,380
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Selling, general and administrative expense:
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Animal hospital
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10,761
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8,410
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39,022
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|
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|
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34,133
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Laboratory
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8,641
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8,024
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33,550
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31,915
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All other
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9,674
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8,368
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33,456
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32,941
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Corporate
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18,267
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15,493
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|
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65,478
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|
|
|
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58,922
|
|
|
|
|
|
47,343
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|
|
|
|
40,295
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|
|
|
|
171,506
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|
|
|
|
157,911
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Impairment of goodwill and other long-lived assets
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—
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—
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27,019
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—
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Net (gain) loss on sale of assets
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|
|
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(979
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)
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|
|
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1,268
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|
|
|
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(1,152
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)
|
|
|
|
2,455
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Operating income
|
|
|
|
52,654
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|
|
|
|
45,923
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|
|
|
|
247,268
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|
|
|
|
249,014
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Interest expense, net
|
|
|
|
5,215
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|
|
|
|
4,110
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|
|
|
|
17,779
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|
|
|
|
18,549
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Debt retirement costs
|
|
|
|
—
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|
|
|
|
—
|
|
|
|
|
1,709
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|
|
|
—
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Other expense
|
|
|
|
41
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|
|
|
203
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|
|
|
219
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|
|
|
90
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Income before provision for income taxes
|
|
|
|
47,398
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|
|
|
|
41,610
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|
|
|
|
227,561
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|
|
|
|
230,375
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|
Provision for income taxes
|
|
|
|
17,489
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|
|
|
|
15,882
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|
|
|
|
86,878
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|
|
|
|
87,453
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|
Net income
|
|
|
|
29,909
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|
|
|
|
25,728
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|
|
|
|
140,683
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|
|
|
|
142,922
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Net income attributable to noncontrolling interests
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|
|
|
1,550
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|
|
|
|
1,011
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|
|
|
|
5,245
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|
|
|
|
5,411
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Net income attributable to VCA Inc.
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|
$
|
28,359
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$
|
24,717
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|
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$
|
135,438
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|
|
|
|
$
|
137,511
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|
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Diluted earnings per share
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$
|
0.33
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|
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$
|
0.28
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|
|
|
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$
|
1.54
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|
|
|
|
$
|
1.53
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Weighted-average shares outstanding for diluted earnings per share
|
|
|
|
85,121
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|
|
|
|
89,650
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|
|
|
|
87,825
|
|
|
|
|
89,663
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
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|
VCA Inc.
Condensed, Consolidated Balance Sheets
(Unaudited)
(In thousands)
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|
December 31, 2014
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December 31, 2013
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Assets
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Current assets:
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|
|
|
|
|
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|
|
|
|
|
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Cash and cash equivalents
|
|
|
|
$
|
81,383
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|
|
|
|
|
|
|
|
|
$
|
125,029
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|
Trade accounts receivable, net
|
|
|
|
60,482
|
|
|
|
|
|
|
|
|
|
59,900
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Inventory
|
|
|
|
56,050
|
|
|
|
|
|
|
|
|
|
55,067
|
|
Prepaid expenses and other
|
|
|
|
36,924
|
|
|
|
|
|
|
|
|
|
25,417
|
|
Deferred income taxes
|
|
|
|
30,331
|
|
|
|
|
|
|
|
|
|
29,018
|
|
Prepaid income taxes
|
|
|
|
18,277
|
|
|
|
|
|
|
|
|
|
15,434
|
|
Total current assets
|
|
|
|
283,447
|
|
|
|
|
|
|
|
|
|
309,865
|
|
Property and equipment, net
|
|
|
|
468,041
|
|
|
|
|
|
|
|
|
|
448,366
|
|
Other assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill
|
|
|
|
1,415,861
|
|
|
|
|
|
|
|
|
|
1,321,234
|
|
Other intangible assets, net
|
|
|
|
88,175
|
|
|
|
|
|
|
|
|
|
86,671
|
|
Notes receivable, net
|
|
|
|
2,807
|
|
|
|
|
|
|
|
|
|
3,454
|
|
Deferred financing costs, net
|
|
|
|
7,874
|
|
|
|
|
|
|
|
|
|
2,987
|
|
Other
|
|
|
|
65,815
|
|
|
|
|
|
|
|
|
|
55,632
|
|
Total assets
|
|
|
|
$
|
2,332,020
|
|
|
|
|
|
|
|
|
|
$
|
2,228,209
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current portion of long-term debt
|
|
|
|
$
|
19,356
|
|
|
|
|
|
|
|
|
|
$
|
51,087
|
|
Accounts payable
|
|
|
|
46,284
|
|
|
|
|
|
|
|
|
|
36,962
|
|
Accrued payroll and related liabilities
|
|
|
|
64,359
|
|
|
|
|
|
|
|
|
|
57,337
|
|
Other accrued liabilities
|
|
|
|
67,219
|
|
|
|
|
|
|
|
|
|
58,762
|
|
Total current liabilities
|
|
|
|
197,218
|
|
|
|
|
|
|
|
|
|
204,148
|
|
Long-term debt, less current portion
|
|
|
|
775,412
|
|
|
|
|
|
|
|
|
|
568,558
|
|
Deferred income taxes
|
|
|
|
103,502
|
|
|
|
|
|
|
|
|
|
93,082
|
|
Other liabilities
|
|
|
|
33,190
|
|
|
|
|
|
|
|
|
|
34,127
|
|
Total liabilities
|
|
|
|
1,109,322
|
|
|
|
|
|
|
|
|
|
899,915
|
|
Redeemable noncontrolling interests
|
|
|
|
11,077
|
|
|
|
|
|
|
|
|
|
10,678
|
|
VCA Inc. stockholders’ equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock
|
|
|
|
83
|
|
|
|
|
|
|
|
|
|
89
|
|
Additional paid-in capital
|
|
|
|
155,802
|
|
|
|
|
|
|
|
|
|
384,797
|
|
Retained earnings
|
|
|
|
1,064,158
|
|
|
|
|
|
|
|
|
|
928,720
|
|
Accumulated other comprehensive loss
|
|
|
|
(19,397
|
)
|
|
|
|
|
|
|
|
|
(6,190
|
)
|
Total VCA Inc. stockholders’ equity
|
|
|
|
1,200,646
|
|
|
|
|
|
|
|
|
|
1,307,416
|
|
Noncontrolling interests
|
|
|
|
10,975
|
|
|
|
|
|
|
|
|
|
10,200
|
|
Total equity
|
|
|
|
1,211,621
|
|
|
|
|
|
|
|
|
|
1,317,616
|
|
Total liabilities and equity
|
|
|
|
$
|
2,332,020
|
|
|
|
|
|
|
|
|
|
$
|
2,228,209
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
VCA Inc.
Condensed, Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
|
|
|
|
|
|
|
|
|
|
Twelve Months Ended December 31,
|
|
|
|
|
2014
|
|
|
|
|
|
|
|
|
2013
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
$
|
140,683
|
|
|
|
|
|
|
|
|
|
$
|
142,922
|
|
Adjustments to reconcile net income to net cash provided by
operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impairment of goodwill and other long-lived assets
|
|
|
|
27,019
|
|
|
|
|
|
|
|
|
|
—
|
|
Depreciation and amortization
|
|
|
|
79,427
|
|
|
|
|
|
|
|
|
|
77,409
|
|
Amortization of debt issue costs
|
|
|
|
1,391
|
|
|
|
|
|
|
|
|
|
1,245
|
|
Provision for uncollectible accounts
|
|
|
|
6,248
|
|
|
|
|
|
|
|
|
|
7,360
|
|
Debt retirement costs
|
|
|
|
1,709
|
|
|
|
|
|
|
|
|
|
—
|
|
Net (gain) loss on sale of assets
|
|
|
|
(1,152
|
)
|
|
|
|
|
|
|
|
|
2,455
|
|
Share-based compensation
|
|
|
|
17,200
|
|
|
|
|
|
|
|
|
|
14,104
|
|
Deferred income taxes
|
|
|
|
8,853
|
|
|
|
|
|
|
|
|
|
18,064
|
|
Excess tax benefit from stock based compensation
|
|
|
|
(6,241
|
)
|
|
|
|
|
|
|
|
|
(3,446
|
)
|
Other
|
|
|
|
531
|
|
|
|
|
|
|
|
|
|
(377
|
)
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade accounts receivable
|
|
|
|
(3,900
|
)
|
|
|
|
|
|
|
|
|
(11,048
|
)
|
Inventory, prepaid expense and other assets
|
|
|
|
(22,897
|
)
|
|
|
|
|
|
|
|
|
(7,134
|
)
|
Accounts payable and other accrued liabilities
|
|
|
|
11,597
|
|
|
|
|
|
|
|
|
|
557
|
|
Accrued payroll and related liabilities
|
|
|
|
6,782
|
|
|
|
|
|
|
|
|
|
6,502
|
|
Income taxes
|
|
|
|
2,960
|
|
|
|
|
|
|
|
|
|
7,759
|
|
Net cash provided by operating activities
|
|
|
|
270,210
|
|
|
|
|
|
|
|
|
|
256,372
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Business acquisitions, net of cash acquired
|
|
|
|
(138,490
|
)
|
|
|
|
|
|
|
|
|
(52,688
|
)
|
Real estate acquired in connection with business acquisitions
|
|
|
|
(9,017
|
)
|
|
|
|
|
|
|
|
|
(5,328
|
)
|
Property and equipment additions
|
|
|
|
(72,948
|
)
|
|
|
|
|
|
|
|
|
(73,270
|
)
|
Proceeds from sale of assets
|
|
|
|
3,904
|
|
|
|
|
|
|
|
|
|
7,096
|
|
Other
|
|
|
|
(2,691
|
)
|
|
|
|
|
|
|
|
|
(2,541
|
)
|
Net cash used in investing activities
|
|
|
|
(219,242
|
)
|
|
|
|
|
|
|
|
|
(126,731
|
)
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Repayment of debt
|
|
|
|
(568,011
|
)
|
|
|
|
|
|
|
|
|
(41,129
|
)
|
Proceeds from issuance of long-term debt
|
|
|
|
600,000
|
|
|
|
|
|
|
|
|
|
—
|
|
Proceeds from revolving credit facility
|
|
|
|
135,000
|
|
|
|
|
|
|
|
|
|
—
|
|
Payment of financing costs
|
|
|
|
(7,987
|
)
|
|
|
|
|
|
|
|
|
—
|
|
Distributions to noncontrolling interest partners
|
|
|
|
(5,009
|
)
|
|
|
|
|
|
|
|
|
(4,866
|
)
|
Purchase of noncontrolling interest
|
|
|
|
(326
|
)
|
|
|
|
|
|
|
|
|
(6,581
|
)
|
Proceeds from issuance of common stock under stock option plans
|
|
|
|
2,859
|
|
|
|
|
|
|
|
|
|
17,233
|
|
Excess tax benefit from stock based compensation
|
|
|
|
6,241
|
|
|
|
|
|
|
|
|
|
3,446
|
|
Repurchase of common stock
|
|
|
|
(255,108
|
)
|
|
|
|
|
|
|
|
|
(39,367
|
)
|
Other
|
|
|
|
(1,424
|
)
|
|
|
|
|
|
|
|
|
(749
|
)
|
Net cash used in financing activities
|
|
|
|
(93,765
|
)
|
|
|
|
|
|
|
|
|
(72,013
|
)
|
Effect of currency exchange rate changes on cash and cash equivalents
|
|
|
|
(849
|
)
|
|
|
|
|
|
|
|
|
(1,034
|
)
|
(Decrease) increase in cash and cash equivalents
|
|
|
|
(43,646
|
)
|
|
|
|
|
|
|
|
|
56,594
|
|
Cash and cash equivalents at beginning of period
|
|
|
|
125,029
|
|
|
|
|
|
|
|
|
|
68,435
|
|
Cash and cash equivalents at end of period
|
|
|
|
$
|
81,383
|
|
|
|
|
|
|
|
|
|
$
|
125,029
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
VCA Inc.
Supplemental Operating Data
(Unaudited - In thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table #1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of net income attributable to VCA Inc.,
to Non-GAAP net income attributable to VCA Inc.(1)
|
|
|
|
Three Months Ended December 31,
|
|
|
|
Twelve Months Ended December 31,
|
|
|
|
|
|
|
|
|
|
|
2014
|
|
|
|
2013
|
|
|
|
2014
|
|
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to VCA Inc.
|
|
|
|
$
|
28,359
|
|
|
|
|
$
|
24,717
|
|
|
|
|
$
|
135,438
|
|
|
|
|
$
|
137,511
|
|
Vacant property adjustments(2)
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
3,804
|
|
Tax benefit from vacant property adjustments(2), (7)
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
(1,489
|
)
|
Inventory adjustment(3)
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
(2,808
|
)
|
Tax expense from inventory adjustment(3), (7)
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
1,099
|
|
Impairment of goodwill and other long-lived assets(4)
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
27,019
|
|
|
|
|
—
|
|
Tax benefit on impairment charge(4), (7)
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
(9,978
|
)
|
|
|
|
—
|
|
Debt Retirement costs(5)
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
1,709
|
|
|
|
|
—
|
|
Tax benefit from debt retirement costs(5), (7)
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
(669
|
)
|
|
|
|
—
|
|
Acquisitions related amortization(1)
|
|
|
|
5,434
|
|
|
|
|
4,781
|
|
|
|
|
21,039
|
|
|
|
|
20,934
|
|
Tax benefit from acquisitions related amortization(1), (7)
|
|
|
|
(2,127
|
)
|
|
|
|
(1,871
|
)
|
|
|
|
(8,235
|
)
|
|
|
|
(8,194
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP net income attributable to VCA Inc.
|
|
|
|
$
|
31,666
|
|
|
|
|
$
|
27,627
|
|
|
|
|
$
|
166,323
|
|
|
|
|
$
|
150,857
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table #2
|
|
|
|
Three Months Ended December 31,
|
|
|
|
Twelve Months Ended December 31,
|
Reconciliation of diluted earnings per share to Non-GAAP
diluted earnings per share(1)
|
|
|
|
|
|
|
|
|
|
|
2014
|
|
|
|
2013
|
|
|
|
2014
|
|
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share
|
|
|
|
$
|
0.33
|
|
|
|
|
$
|
0.28
|
|
|
|
|
$
|
1.54
|
|
|
|
|
$
|
1.53
|
|
Impact of vacant property adjustments, net of tax(2)
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
0.03
|
|
Impact of inventory adjustment, net of tax(3)
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
(0.02
|
)
|
Impact of goodwill and other long-lived assets impairment, net of
tax(4)
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
0.19
|
|
|
|
|
—
|
|
Impact of debt retirement costs, net of tax(5)
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
0.01
|
|
|
|
|
—
|
|
Impact of acquisitions related amortization, net of tax(1)
|
|
|
|
0.04
|
|
|
|
|
0.03
|
|
|
|
|
0.15
|
|
|
|
|
0.14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP diluted earnings per share
|
|
|
|
$
|
0.37
|
|
|
|
|
$
|
0.31
|
|
|
|
|
$
|
1.89
|
|
|
|
|
$
|
1.68
|
|
Shares used for computing diluted earnings per share
|
|
|
|
85,121
|
|
|
|
|
89,650
|
|
|
|
|
87,825
|
|
|
|
|
89,663
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
VCA Inc.
Supplemental Operating Data (continued)
(Unaudited - In thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
|
Table #3
|
|
|
|
|
|
|
|
|
Reconciliation of consolidated gross profit to Non-GAAP
consolidated gross profit(1)
|
|
|
|
December 31,
|
|
|
|
December 31,
|
|
|
|
|
2014
|
|
|
|
2013
|
|
|
|
2014
|
|
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated gross profit
|
|
|
|
$
|
99,018
|
|
|
|
|
$
|
87,486
|
|
|
|
|
$
|
444,641
|
|
|
|
|
$
|
409,380
|
|
Impact of vacant property adjustments(2)
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
2,046
|
|
Impact of inventory adjustment(3)
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
(2,808
|
)
|
Impact of rent expense adjustments(6)
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
(1,396
|
)
|
Impact of acquisitions related amortization(1)
|
|
|
|
5,374
|
|
|
|
|
4,718
|
|
|
|
|
20,780
|
|
|
|
|
20,753
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP consolidated gross profit
|
|
|
|
$
|
104,392
|
|
|
|
|
$
|
92,204
|
|
|
|
|
$
|
465,421
|
|
|
|
|
$
|
427,975
|
|
Non-GAAP consolidated gross profit margin
|
|
|
|
21.8
|
%
|
|
|
|
21.2
|
%
|
|
|
|
24.3
|
%
|
|
|
|
23.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table #4
|
|
|
|
Three Months Ended December 31,
|
|
|
|
Twelve Months Ended December 31,
|
Reconciliation of consolidated operating income to Non-GAAP
consolidated operating income(1)
|
|
|
|
|
|
|
|
|
|
|
2014
|
|
|
|
2013
|
|
|
|
2014
|
|
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated operating income
|
|
|
|
$
|
52,654
|
|
|
|
|
$
|
45,923
|
|
|
|
|
$
|
247,268
|
|
|
|
|
$
|
249,014
|
|
Impact of vacant property adjustments(2)
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
3,804
|
|
Impact of inventory adjustment(3)
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
(2,808
|
)
|
Impact of goodwill and other long-lived assets impairment(4)
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
27,019
|
|
|
|
|
—
|
|
Impact of rent expense adjustments(6)
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
(1,396
|
)
|
Impact of acquisitions related amortization(1)
|
|
|
|
5,434
|
|
|
|
|
4,781
|
|
|
|
|
21,039
|
|
|
|
|
20,934
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP consolidated operating income
|
|
|
|
$
|
58,088
|
|
|
|
|
$
|
50,704
|
|
|
|
|
$
|
295,326
|
|
|
|
|
$
|
269,548
|
|
Non-GAAP consolidated operating margin
|
|
|
|
12.1
|
%
|
|
|
|
11.6
|
%
|
|
|
|
15.4
|
%
|
|
|
|
14.9
|
%
|
_________________________________________________
(1)
|
|
|
Management believes that investors' understanding of our
performance is enhanced by disclosing adjusted measures as the
reported amounts, adjusted to exclude certain significant items
and acquisition-related amortization. Non-GAAP net income,
Non-GAAP diluted earnings per common share, Non-GAAP consolidated
gross profit and Non-GAAP consolidated operating income measures
are not, and should not be viewed as substitutes for U.S.
generally accepted accounting principles (GAAP) net income, its
components and diluted earnings per share.
|
|
(2)
|
|
|
During the first quarter of 2013, we recorded a write-down to net
realizable value of $1.8 million related to a vacant property that
was held for sale, and we accrued costs totaling $2.0 million
related to a vacant leased property.
|
|
(3)
|
|
|
In the third quarter of 2013, we recorded a non-cash physical
inventory adjustment in our Animal Hospital business segment which
resulted in a $2.8 million credit adjustment to direct costs.
|
|
(4)
|
|
|
In the third quarter, we recognized a non-cash impairment charge of
$27.0 million related to the write-down of goodwill and other
long-lived assets in our Vetstreet business.
|
|
(5)
|
|
|
Also in the third quarter, we incurred debt retirement costs of $1.7
million related to the refinancing of our senior credit facility.
|
|
(6)
|
|
|
In the second quarter of 2013, we recorded a reduction in rent
expense as a result of a capital lease that was previously treated
as an operating lease in our Animal Hospital segment.
|
|
(7)
|
|
|
The rate used to calculate the tax benefit is the statutory rate of
the applicable year.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
VCA Inc.
Supplemental Operating Data (continued)
(Unaudited - In thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of
|
Table #5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2014
|
|
|
|
December 31, 2013
|
Selected consolidated balance sheet data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Senior term notes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
600,000
|
|
|
|
|
$
|
556,914
|
|
Revolving credit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
135,000
|
|
|
|
|
—
|
|
Other debt and capital leases
|
|
|
|
|
|
|
|
|
|
|
|
|
|
59,768
|
|
|
|
|
62,731
|
|
Total debt
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
794,768
|
|
|
|
|
$
|
619,645
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended December 31,
|
|
|
|
Twelve Months Ended December 31,
|
Table #6
|
|
|
|
|
|
|
Selected expense data
|
|
|
|
2014
|
|
|
|
2013
|
|
|
|
2014
|
|
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rent expense
|
|
|
|
$
|
18,463
|
|
|
|
|
$
|
16,940
|
|
|
|
|
$
|
69,747
|
|
|
|
|
$
|
67,615
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization included in direct costs:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Animal hospital
|
|
|
|
$
|
15,822
|
|
|
|
|
$
|
14,530
|
|
|
|
|
$
|
60,395
|
|
|
|
|
$
|
57,011
|
|
Laboratory
|
|
|
|
2,649
|
|
|
|
|
2,571
|
|
|
|
|
10,358
|
|
|
|
|
10,157
|
|
All other
|
|
|
|
824
|
|
|
|
|
1,519
|
|
|
|
|
5,731
|
|
|
|
|
5,122
|
|
Intercompany
|
|
|
|
(514
|
)
|
|
|
|
(448
|
)
|
|
|
|
(1,931
|
)
|
|
|
|
(1,783
|
)
|
|
|
|
|
$
|
18,781
|
|
|
|
|
$
|
18,172
|
|
|
|
|
$
|
74,553
|
|
|
|
|
$
|
70,507
|
|
Depreciation and amortization included in selling, general and
administrative expense
|
|
|
|
987
|
|
|
|
|
1,454
|
|
|
|
|
4,874
|
|
|
|
|
6,902
|
|
Total depreciation and amortization
|
|
|
|
$
|
19,768
|
|
|
|
|
$
|
19,626
|
|
|
|
|
$
|
79,427
|
|
|
|
|
$
|
77,409
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based compensation included in direct costs:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Laboratory
|
|
|
|
$
|
216
|
|
|
|
|
$
|
120
|
|
|
|
|
$
|
653
|
|
|
|
|
$
|
448
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based compensation included in selling, general and
administrative expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Animal hospital
|
|
|
|
721
|
|
|
|
|
306
|
|
|
|
|
2,132
|
|
|
|
|
1,723
|
|
Laboratory
|
|
|
|
440
|
|
|
|
|
319
|
|
|
|
|
1,513
|
|
|
|
|
1,198
|
|
All other
|
|
|
|
237
|
|
|
|
|
236
|
|
|
|
|
842
|
|
|
|
|
794
|
|
Corporate
|
|
|
|
3,352
|
|
|
|
|
2,783
|
|
|
|
|
12,060
|
|
|
|
|
9,941
|
|
|
|
|
|
4,750
|
|
|
|
|
3,644
|
|
|
|
|
16,547
|
|
|
|
|
13,656
|
|
Total share-based compensation
|
|
|
|
$
|
4,966
|
|
|
|
|
$
|
3,764
|
|
|
|
|
$
|
17,200
|
|
|
|
|
$
|
14,104
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONTACT:
VCA Inc.
Tomas Fuller
Chief Financial Officer
(310)
571-6505
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