- Revenue increased 11.1% to a first
quarter record of $499.5 million
- Gross profit increased 12.2% to $113.9
million
- Operating income increased 12.9% to
$69.1 million
- Diluted earnings per common share
increased 21.1% to $0.46
- Non-GAAP diluted earnings per common
share increased 19.0% to $0.50
VCA Inc. (NASDAQ: WOOF), a leading animal
healthcare company in the United States and Canada, today reported
financial results for the first quarter ended March 31, 2015, as
follows: revenue increased 11.1% to a first quarter record of
$499.5 million; gross profit increased 12.2% to $113.9 million;
operating income increased 12.9% to $69.1 million; net income
increased 12.5% to $38.3 million and diluted earnings per common
share increased 21.1% to $0.46. Non-GAAP diluted earnings per
common share, which excludes acquisition-related amortization,
increased 19.0% to $0.50.
Bob Antin, Chairman and CEO, stated, “Our Animal Hospital
business segment same-store revenue growth rate continues to
accelerate, driven by an increase in both the number of orders and
the average revenue per order. Our Laboratory business segment
experienced 6.1% internal revenue growth resulting in a 250 basis
point increase in gross profit margin. Accordingly, we are very
optimistic with respect to our results for the full year ended
December 2015.
“Animal Hospital revenue in the current quarter increased 11.8%,
to $393.0 million, driven by acquisitions made during the past 12
months and same-store revenue growth of 5.3%. Our same-store gross
profit margin increased to 14.6% from 14.1%, and our total gross
margin increased to 14.1%, from 13.9% in the prior-year quarter.
During the quarter, we acquired 11 independent animal hospitals
which had historical combined annual revenue of $16.3 million.
“Laboratory internal revenue in the first quarter increased
6.1%, to $94.0 million. Our Laboratory gross profit margin
increased to 51.1% from 48.6%, and our operating margin increased
to 41.6%, from 39.6% in the prior-year quarter.
“During the quarter we repurchased 850,000 shares of our common
stock for $43.3 million. Since the Board authorized our repurchase
programs in April 2013, through the first quarter 2015, we have
acquired 8.2 million shares for $321.8 million. We currently have
$203.4 million left in our authorization.”
2015 Guidance
We re-affirm the annual guidance we provided on February 11,
2015.
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 first quarter 2015 financial results during
a conference call today, April 29th, 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 statements addressing our 2015 guidance and 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: the continued effects of the economic uncertainty prevailing
in regions in which we operate; 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, Reports on Form 10-Q and our other filings with the
SEC.
About VCA Inc.
We own, operate and manage the largest networks 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.
VCA Inc. Condensed, Consolidated Income
Statements (Unaudited)
(In thousands, except per share
amounts)
Three Months Ended March
31, 2015 2014 Revenue:
Animal hospital $ 393,026 $ 351,588 Laboratory 93,972 88,534 All
other 34,227 28,121 Intercompany (21,772 ) (18,736 )
499,453 449,507 Direct costs
385,591 348,056 Gross profit: Animal hospital 55,484 48,800
Laboratory 47,982 43,031 All other 11,424 9,969 Intercompany
(1,028 ) (349 ) 113,862 101,451
Selling, general and administrative expense: Animal hospital
11,221 9,128 Laboratory 8,865 8,018 All other 8,687 8,348 Corporate
15,625 15,946 44,398
41,440 Net loss (gain) on sale or disposal of
assets 335 (1,221 ) Operating income 69,129
61,232 Interest expense, net 4,837 4,167 Other expense (income)
66 (53 ) Income before provision for income
taxes 64,226 57,118 Provision for income taxes 24,673
22,203 Net income 39,553 34,915 Net income
attributable to noncontrolling interests 1,252
872 Net income attributable to VCA Inc. $ 38,301 $
34,043 Diluted earnings per share $ 0.46 $
0.38 Weighted-average shares outstanding for diluted
earnings per share 83,373 89,421
VCA Inc. Condensed, Consolidated Balance
Sheets (Unaudited)
(In thousands)
March 31,
December 31, 2015 2014 Assets Current
assets: Cash and cash equivalents $ 59,278 $ 81,383 Trade accounts
receivable, net 73,766 60,482 Inventory 55,142 56,050 Prepaid
expenses and other 30,425 36,924 Deferred income taxes 30,324
30,331 Prepaid income taxes — 18,277
Total current assets 248,935 283,447 Property and equipment, net
472,944 468,041 Other assets: Goodwill 1,439,598 1,415,861 Other
intangible assets, net 82,913 88,175 Notes receivable 2,695 2,807
Deferred financing costs, net 7,440 7,874 Other 70,477
65,815
Total assets
$ 2,325,002 $ 2,332,020
Liabilities and Equity
Current liabilities: Current portion of long-term debt $ 26,598 $
19,356 Accounts payable 40,997 46,284 Accrued payroll and related
liabilities 78,159 64,359 Income tax payable 2,570 — Other accrued
liabilities 69,979 67,219 Total current
liabilities 218,303 197,218 Long-term debt, less current portion
766,591 775,412 Deferred income taxes 103,162 103,502 Other
liabilities 31,745 33,190 Total
liabilities 1,119,801 1,109,322 Redeemable noncontrolling interests
11,108 11,077 VCA Inc. stockholders’ equity: Common stock 82 83
Additional paid-in capital 116,068 155,802 Retained earnings
1,102,459 1,064,158 Accumulated other comprehensive loss
(34,605 ) (19,397 ) Total VCA Inc. stockholders’ equity
1,184,004 1,200,646 Noncontrolling interests 10,089
10,975 Total equity 1,194,093
1,211,621 Total liabilities and equity $ 2,325,002 $
2,332,020
VCA Inc. Condensed,
Consolidated Statements of Cash Flows (Unaudited)
(In thousands)
Three Months Ended March
31, 2015 2014 Cash flows
from operating activities: Net income $ 39,553 $ 34,915 Adjustments
to reconcile net income to net cash provided by operating
activities: Depreciation and amortization 19,797 19,767
Amortization of debt issue costs 434 304 Provision for
uncollectible accounts 1,183 890 Net loss (gain) on sale or
disposal of assets 335 (1,221 ) Share-based compensation 4,132
4,544 Excess tax benefit from stock based compensation (791 ) (392
) Other (989 ) (905 ) Changes in operating assets and liabilities:
Trade accounts receivable (14,570 ) (5,825 ) Inventory, prepaid
expense and other assets 2,862 (1,389 ) Accounts payable and other
accrued liabilities (6,954 ) (3,773 ) Accrued payroll and related
liabilities 14,052 6,247 Income taxes 21,581
15,165 Net cash provided by operating activities
80,625 68,327 Cash flows from investing
activities: Business acquisitions, net of cash acquired (32,150 )
(17,295 ) Real estate acquired in connection with business
acquisitions (1,502 ) — Property and equipment additions (16,526 )
(16,619 ) Proceeds from sale of assets 92 859 Other (576 )
520 Net cash used in investing activities
(50,662 ) (32,535 ) Cash flows from financing activities:
Repayment of debt (5,165 ) (12,806 ) Distributions to
non-controlling interest partners (1,325 ) (1,090 )
Purchase of non-controlling interests
(1,483 ) (326 ) Proceeds from issuance of common stock under stock
option plans 404 372 Excess tax benefit from stock based
compensation 791 392 Repurchase of common stock (44,845 ) (9,793 )
Other (80 ) — Net cash used in financing
activities (51,703 ) (23,251 ) Effect of currency
exchange rate changes on cash and cash equivalents (365 ) (282 )
(Decrease) increase in cash and cash equivalents (22,105 ) 12,259
Cash and cash equivalents at beginning of period 81,383
125,029 Cash and cash equivalents at end of
period $ 59,278 $ 137,288
VCA
Inc. Supplemental Operating Data (cont)
(Unaudited - In thousands, except per
share amounts)
Table #1
Reconciliation of net income attributable to
Three Months EndedMarch
31,
VCA Inc., to Non-GAAP net income attributable to VCA
Inc. (1) 2015 2014 Net income
attributable to VCA Inc. $ 38,301 $ 34,043 Acquisitions related
amortization (1) 5,526 5,147
Tax benefit from acquisitions related
amortization (1)
(2,163 ) (2,015 ) Non-GAAP net income attributable to
VCA Inc. $ 41,664 $ 37,175
Table #2
Three Months EndedMarch 31, Reconciliation of
diluted earnings per share to Non-GAAP diluted earnings per
share (1) 2015 2014 Diluted
earnings per share $ 0.46 $ 0.38 Impact of acquisitions related
amortization, net of tax (1) 0.04 0.04
Non-GAAP diluted earnings per share $ 0.50 $ 0.42
Shares used for computing diluted earnings per share
83,373 89,421
Table #3
Three Months EndedMarch 31, Reconciliation of
consolidated gross profit to Non-GAAP consolidated gross
profit (1) 2015 2014 Consolidated
gross profit $ 113,862 $ 101,451 Impact of acquisitions related
amortization (1) 5,465 5,080 Non-GAAP
consolidated gross profit $ 119,327 $ 106,531
Non-GAAP consolidated gross profit margin 23.9 % 23.7
%
Table #4 Three Months EndedMarch 31,
Reconciliation of consolidated operating income to
Non-GAAP consolidated operating income (1)
2015 2014 Consolidated operating income $
69,129 $ 61,232 Impact of acquisitions related amortization (1)
5,526 5,147 Non-GAAP consolidated
operating income $ 74,655 $ 66,379 Non-GAAP
consolidated operating margin 14.9 % 14.8 %
_________________________________________________
(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.
VCA Inc. Supplemental Operating Data (cont)
(Unaudited - In thousands, except per
share amounts)
As of Table #5
March 31, 2015
December 31, 2014
Selected consolidated balance sheet data Debt: Senior term
notes $ 600,000 $ 600,000 Revolving credit 135,000 135,000 Other
debt and capital leases 58,189 59,768
Total debt $ 793,189 $ 794,768
Three Months
EndedMarch 31, Table #6 Selected expense
data 2015 2014 Rent expense $ 18,780
$ 16,929
Depreciation and amortization included in
direct costs:
Animal hospital $ 15,962 $ 14,574 Laboratory 2,475 2,516 All other
940 1,731 Intercompany (523 ) (465 ) $ 18,854 $
18,356
Depreciation and amortization included in
selling, general and administrative expense
943 1,411 Total depreciation and
amortization $ 19,797 $ 19,767 Share-based
compensation included in direct costs: Laboratory $ 161 $ 150
Share-based compensation included in
selling, general and administrative expense:
Animal hospital 664 517 Laboratory 366 381 All other 202 182
Corporate 2,739 3,314 3,971
4,394 Total share-based compensation $ 4,132
$ 4,544
VCA Inc.Tomas Fuller, 310-571-6505Chief Financial Officer
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