WESTLAKE, Texas, Feb. 7, 2008 (PRIME NEWSWIRE) -- Animal Health International, Inc. (Nasdaq:AHII) announced today that net sales increased 19.4%, or $32.9 million, to $203.2 million for the three months ended December 31, 2007, from $170.3 million for the same quarter last year. Acquisitions accounted for $13.8 million or 42% of the increase in sales. Organic sales increased 11.2% from the same period last year. Net income increased 26.1% to $5.5 million or $0.23 per fully diluted share.
* Rebates, as anticipated, were lower than in the same period last year. This resulted in a gross margin ratio of 19.6%, compared to 21.9% for the same period last year. * Selling, general and administrative expense included one-time non- recurring severance charges of $1.0 million, and $1.2 million for stock option and public company expenses, which were not incurred last year as a private company.
Earnings before interest, tax, depreciation and amortization (EBITDA) for the quarter was $13.9 million, a reduction of $0.9 million compared to the same period last year.
Net sales increased $51.6 million, or 16.3%, to $367.6 million for the six months ended December 31, 2007. Acquisitions accounted for $24.6 million or 48% of this increase. Organic sales increased 8.5% from the same period last year. EBITDA for the fiscal year-to-date period was $19.9 million, a reduction of $1.9 million from the same period last year. Net income for the year to date was $6.6 million, an increase of 24% from last year's net income of $5.3 million. For the year to date, earnings were $.27 per fully diluted share.
* Selling, general and administrative expense included one-time non- recurring severance charges of $1.0 million and $1.9 million for stock option and public company expenses, which were not incurred last year as a private company. * Interest expense included a charge of $0.3 million for the unamortized finance fees that were written off when the Company refinanced its term loan debt.
In October 2007, the Company acquired Kane Veterinary Supplies, Ltd. (Kane) for approximately $24 million in cash, together with a performance-based earn out. Kane is based in Edmonton, Canada, and is a leading distributor of animal health products in both the production and companion animal markets.
Fiscal Year 2008 Guidance
The following statements are based on current information and the Company assumes no obligation to update them. These statements are forward-looking and inherently uncertain.
The Company affirms its EBITDA guidance to be in the range of $38.0 to $40.0 million. The Company expects its net income for its fiscal year ending June 30, 2008, to be in the range of $13 to $14 million, and net sales are expected to be in the $700 to $730 million range. This guidance excludes any effect of future acquisitions.
Conference Call
The Company plans to host its investor conference call today at 10:00 a.m. Eastern Standard Time to discuss these results and its business outlook. You can access the conference call by dialing (719) 325-4911. Participants will be required to register their name and company affiliation for the conference call. Audio replay will be made available by accessing the Company's web site at www.ahii.com under the Investor Relations tab.
Use of Non-GAAP measures
EBITDA represents net income before interest expense, income tax expense, depreciation and amortization and acquisition costs. We present EBITDA as a supplemental performance measure because we believe it facilitates operating performance comparisons from period to period and company to company by backing out potential differences caused by variations in capital structures (affecting interest expense), tax positions (such as the impact on periods or companies of changes in effective tax rates or net operating losses), the age and book depreciation of fixed assets (affecting relative depreciation expense), the impact of purchase accounting and SFAS No. 142 (affecting depreciation and amortization expense). Because EBITDA facilitates internal comparisons of our historical financial position and operating performance on a more consistent basis, we also use EBITDA in measuring our performance relative to that of our competitors and in evaluating acquisition opportunities. EBITDA is not a measurement of our financial performance under generally accepted accounting principles in the United States, or GAAP, and should not be considered as an alternative to net income, operating income or any other performance measures derived in accordance with GAAP or as an alternative to cash flow from operating activities as a measure of our profitability or liquidity. We understand that although EBITDA is frequently used by securities analysts, lenders and others in their evaluation of companies, EBITDA has limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are:
* EBITDA does not reflect our cash expenditures, or future requirements for capital expenditures or contractual commitments;
* EBITDA does not reflect changes in, or cash requirements for, our working capital needs;
* EBITDA does not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on our debts;
* Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA does not reflect any cash requirements for such replacements; and
* Other companies in our industry may calculate EBITDA differently than we do, limiting its usefulness as a comparative measure
About Animal Health International, Inc.
Animal Health International, Inc., through its wholly owned subsidiaries, is engaged in the distribution of animal health products in the United States and Canada. The Company's subsidiaries distribute more than 40,000 products sourced from over 1,500 manufacturers to over 62,000 customers, including veterinarians, production animal operators, and animal health product retailers. Products the Company's subsidiaries distribute include pharmaceuticals, vaccines, parasiticides, diagnostics, capital equipment, sanitizers, pet foods, devices and supplies. The Company was founded in 1954, and has its corporate headquarters located in Westlake, Texas.
Safe Harbor for Forward-Looking Statements
Certain items in this press release may constitute forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations and beliefs and are subject to a number of trends and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. Animal Health International can give no assurance that expectations will be attained. Factors that could cause actual results to differ materially from Animal Health International's expectations include, but are not limited to, the outbreak of an infectious disease within an animal population, Animal Health International's inability to maintain relationships with manufacturers, an adverse change in manufacturer rebates or Animal Health International's inability to meet applicable rebate targets, the loss of key personnel, the loss of products or delays in product availability from one or more manufacturers, changes in customer preferences, consolidation in the animal heath products industry, and other risks detailed in Animal Health International's filings with the Securities and Exchange Commission, including Animal Health International's Annual Report on Form 10-K, which was filed on September 18, 2007. Such forward-looking statements speak only as of the date of this press release. Animal Health International expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in Animal Health International's expectations with regard thereto or change in events, conditions, or circumstances on which any such statement is based.
ANIMAL HEALTH INTERNATIONAL, INC.
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
Three months ended Six months ended
December 31, December 31,
-------------------- --------------------
2006 2007 2006 2007
Net sales $ 170,279 $ 203,230 $ 315,981 $ 367,595
Direct cost of products
sold 133,028 163,326 251,676 299,060
--------- --------- --------- ---------
Gross profit 37,251 39,904 64,305 68,535
Selling, general, and
administrative expenses
(including salary, wages,
commission, and related
benefits) 22,660 26,262 42,780 49,179
Depreciation and
amortization 1,623 1,712 3,163 3,357
--------- --------- --------- ---------
Operating income 12,968 11,930 18,362 15,999
Other income (expense):
Other income 162 266 302 553
Interest expense (5,810) (2,719) (9,900) (5,366)
--------- --------- --------- ---------
Income before income
taxes 7,320 9,477 8,764 11,186
Income tax expense (2,921) (3,930) (3,464) (4,618)
--------- --------- --------- ---------
Net income $ 4,399 $ 5,547 $ 5,300 $ 6,568
========= ========= ========= =========
Dividend on preferred
stock -- -- (53,323) --
Preferred stock
participation in
undistributed earnings (3,747) -- (3,747) --
--------- --------- --------- ---------
Net income (loss)
available to common
shareholders $ 652 $ 5,547 $ (51,770) $ 6,568
-------------------------- ========= ========= ========= =========
Earnings (loss) per share:
Basic $ 0.29 $ 0.23 $ (22.93) $ 0.27
Diluted $ 0.29 $ 0.23 $ (22.93) $ 0.27
Weighted average shares
outstanding:
Basic 2,258 24,330 2,258 24,330
Diluted 2,258 24,330 2,258 24,330
---------------------------------------------------------------------
ANIMAL HEALTH INTERNATIONAL, INC.
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
Assets June 30, December 31,
2007 2007
---------- ----------
Current assets:
Cash and cash equivalents $ 7,751 $ 5,930
Accounts receivable, net 73,958 98,235
Merchandise inventories, net 80,848 116,746
Other current assets 7,634 5,149
---------- ----------
Total current assets 170,191 226,060
Noncurrent assets:
Property, plant, and equipment, net 17,253 17,332
Goodwill and other intangible assets 137,085 146,479
Other noncurrent assets 5,505 5,117
---------- ----------
Total assets $ 330,034 $ 394,988
========== ==========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 81,976 $ 117,030
Accrued liabilities 15,644 19,357
Current portion of long-term debt 1,363 1,373
---------- ----------
Total current liabilities 98,983 137,760
Noncurrent liabilities:
Long-term debt, net of current portion 117,523 137,900
Other noncurrent liabilities 27,413 27,729
---------- ----------
Total liabilities 243,919 303,389
---------- ----------
Stockholders' equity 86,115 91,599
---------- ----------
Total liabilities and stockholders'
equity $ 330,034 $ 394,988
========== ==========
ANIMAL HEALTH INTERNATIONAL, INC.
EBITDA Reconciliation
(In thousands)
(Unaudited)
Three months ended Six months ended
December 31, December 31,
--------------------- ---------------------
2006 2007 2006 2007
Net Income $ 4,399 $ 5,547 $ 5,300 $ 6,568
Interest expense 5,810 2,719 9,900 5,366
Income tax expense 2,921 3,930 3,464 4,618
Depreciation and
amortization 1,623 1,712 3,163 3,357
--------- --------- --------- ---------
EBITDA $ 14,753 $ 13,908 $ 21,827 $ 19,909
========= ========= ========= =========