EX-99.1 2 a5665572ex99_1.htm EXHIBIT 99.1

Exhibit 99.1

VCA Antech, Inc. Reports First Quarter 2008 Results and Reaffirms its Financial Guidance for 2008

  • First quarter revenue increased 16.1% to $307.8 million
  • First quarter gross profit increased 9.4% to $83.0 million
  • First quarter diluted earnings per share increased 9.1% to $0.36

LOS ANGELES--(BUSINESS WIRE)--VCA Antech, Inc. (NASDAQ: WOOF), a leading animal healthcare company in the United States, today reported financial results for the first quarter ended March 31, 2008, as follows: revenue increased 16.1% to a first quarter record of $307.8 million; gross profit increased 9.4% to $83.0 million; operating income increased 10.5% to $60.0 million; net income increased 10.2% to $31.2 million; and diluted earnings per share increased 9.1% to $0.36.

Bob Antin, Chairman and CEO, stated, “I am pleased with our company’s performance in the first quarter of 2008. Faced with a challenging economic environment and the unusually high internal revenue growth experienced in the prior year, we delivered strong operating results through our continued focus on controlling costs. We continued our very successful acquisition program, acquiring 21 animal hospitals in the first quarter with annual revenues of over $45.0 million.

“Laboratory revenue in the first quarter increased 4.3% to $76.7 million driven primarily by internal revenue growth of 4.1%. Although our laboratory gross margin declined modestly to 48.7% in 2008 compared to 48.9% in the prior year, our operating margin remained constant at 42.2%.

“Animal hospital revenue in the first quarter increased 20.8% to $226.1 million driven by acquisitions, including Healthy Pet Corp. acquired on June 1, 2007, and same-store revenue growth of 1.9%. Our same-store animal hospital gross margin decreased slightly to 19.0% compared to 19.1% in the prior year. Consolidated animal hospital gross margin decreased to 18.2% in 2008 compared to 19.0% in 2007 due to lower margins at acquired hospitals. With the improved leverage on our selling, general and administrative costs, our operating margin decreased only slightly to 15.9% compared to 16.0% in the prior year.”

2008 Financial Guidance

We reaffirm our 2008 financial guidance as follows:

  • Revenue from $1.30 billion to $1.33 billion
  • Diluted earnings per common share from $1.55 to $1.60

Conference Call

We will discuss our company’s first quarter 2008 financial results during a conference call today, April 23, 2008, at 4:30 p.m. Eastern Time. You can access a live broadcast of the call by visiting our website at http://investor.vcaantech.com. You can also access the call via telephone by dialing (877) 591-4949. Interested parties should call at least 10 minutes prior to the start of the call to register.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may and likely will differ materially from the guidance provided in this release. Among the important factors that could cause actual results to differ are: a material adverse change in our financial condition or operations; the impact of adverse trends in the general economy on the rate of our laboratory internal revenue growth and animal hospital same-store revenue growth; the level of direct costs and our ability to maintain revenue at a level necessary to maintain expected operating margins; the level of selling, general and administrative costs; the effects of our recent acquisitions and our ability to effectively manage our growth and achieve operating synergies; a decline in demand for some of our products and services; any disruption in our information technology systems or transportation networks; the effects of competition; any impairment in the carrying value of our goodwill and other intangible assets; changes in prevailing interest rates; our ability to service our debt; and general economic conditions. These and other risk factors are discussed in our Report on Form 10-K for the year ended December 31, 2007, and the reader is directed to these statements for a further discussion of important factors that could cause actual results to differ materially from those in the forward-looking statements.

We own, operate and manage the largest networks of freestanding veterinary hospitals and veterinary-exclusive clinical laboratories in the country, and we supply diagnostic imaging equipment to the veterinary industry.


VCA Antech, Inc.
Consolidated Income Statements
(Unaudited - In thousands, except per share amounts)
           
Three Months Ended
March 31,
2008 2007
Revenue:
Laboratory $ 76,729 $ 73,597
Animal hospital 226,100 187,171
Medical technology 13,849 11,172
Intercompany   (8,846 )   (6,795 )
  307,832     265,145  
 
Direct costs 224,801 189,225
 
Gross profit:
Laboratory 37,342 36,002
Animal hospital 41,137 35,580
Medical technology 4,913 4,311
Intercompany   (361 )   27  
  83,031     75,920  
 
Selling, general and administrative expense:
Laboratory 4,951 4,967
Animal hospital 5,478 5,560
Medical technology 3,434 2,935
Corporate   9,315     8,011  
  23,178     21,473  
 
Write-down and (gain) loss on sale of assets   (184 )   122  
 
Operating income 60,037 54,325
 
Interest expense, net 7,615 5,773
Other expense 177 55
Minority interest   957     846  

Income before provision for income taxes

51,288 47,651
Provision for income taxes   20,086     19,338  
Net income $ 31,202   $ 28,313  
 
Diluted earnings per share $ 0.36   $ 0.33  

 

Shares used for computing diluted earnings per share

  85,865     85,649  

VCA Antech, Inc.
Consolidated Balance Sheets
(Unaudited - In thousands)
   
March 31, December 31,
2008 2007
Assets
Current assets:
Cash and cash equivalents $ 86,244 $ 110,866
Trade accounts receivable, net 48,445 42,650
Inventory 25,100 25,517
Prepaid expenses and other 15,246 15,307
Deferred income taxes 14,659 14,402
Prepaid income taxes   -     8,160  

Total current assets

189,694 216,902
Property and equipment, net 220,879 214,020
Other assets:
Goodwill 866,096 821,967
Other intangible assets, net 24,548 22,373
Deferred financing costs, net 1,421 1,537
Other   24,937     9,912  
Total assets $ 1,327,575   $ 1,286,711  
 
Liabilities and Stockholders' Equity
Current liabilities:
Current portion of long-term obligations $ 7,794 $ 7,886
Accounts payable 29,998 28,092
Accrued payroll and related liabilities 32,712 38,341
Income taxes payable 8,673 -
Other accrued liabilities   49,073     42,074  
Total current liabilities 128,250 116,393
Long-term obligations, less current portion 550,411 552,294
Deferred income taxes 27,871 28,197
Other liabilities 10,709 11,236
Minority interest 12,015 10,207
Stockholders' equity:
Common stock 84 84
Additional paid-in capital 297,673 296,037
Retained earnings 306,800 275,598
Accumulated other comprehensive loss   (6,238 )   (3,335 )
Total stockholders' equity   598,319     568,384  
Total liabilities and stockholders' equity $ 1,327,575   $ 1,286,711  

VCA Antech, Inc.
Consolidated Statements of Cash Flows
(Unaudited - In thousands)
     
Three Months Ended
March 31,
2008 2007
Cash flows from operating activities:
Net income $ 31,202 $ 28,313

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization 7,263 5,931
Amortization of debt costs 116 61
Provision for uncollectible accounts 820 1,425
Write-down and (gain) loss on sale of assets (184 ) 122
Share-based compensation 1,309 1,217
Minority interest in income of subsidiaries 957 846
Distributions to minority interest partners (760 ) (645 )
Deferred income taxes 2,329 1,159
Excess tax benefit from exercise of stock options (133 ) (922 )
Other 86 (142 )
Changes in operating assets and liabilities:
Accounts receivable (6,463 ) (6,040 )
Inventory, prepaid expenses and other assets (2,351 ) (398 )
Accounts payable and other accrued liabilities 2,767 (2,279 )
Accrued payroll and related liabilities (5,629 ) (2,270 )

Income taxes

  16,946     17,637  
Net cash provided by operating activities   48,275     44,015  
Cash flows from investing activities:
Business acquisitions, net of cash acquired (47,826 ) (32,203 )
Real estate acquired in connection with business acquisitions (3,612 ) (7,929 )
Property and equipment additions (9,463 ) (11,875 )
Proceeds from sale of assets 1,747 1,564
Other   (12,124 )   110  
Net cash used in investing activities   (71,278 )   (50,333 )
Cash flows from financing activities:
Repayment of long-term obligations (1,966 ) (2,302 )
Proceeds from issuance of common stock under stock option plans 214 839
Excess tax benefit from exercise of stock options   133     922  
Net cash used in financing activities   (1,619 )   (541 )
Decrease in cash and cash equivalents (24,622 ) (6,859 )
Cash and cash equivalents at beginning of period   110,866     45,104  
Cash and cash equivalents at end of period $ 86,244   $ 38,245  

VCA Antech, Inc.    
Supplemental Operating Data
(Unaudited - In thousands)
As of
Table #1 March 31, December 31,
Selected consolidated balance sheet data 2008 2007
 
Debt:
Revolving credit facility $ - $ -
Senior term notes 526,327 527,675
Other debt and capital leases   31,878     32,505  
Total debt $ 558,205   $ 560,180  
 
Three Months Ended
Table #2 March 31,
Selected expense data 2008 2007
 
Rent expense $ 10,208   $ 8,425  
 
 

Depreciation and amortization included in direct costs:

Laboratory $ 1,632 $ 1,338
Animal hospital 4,783 3,815
Medical technology 307 293
Intercompany   (123 )   (89 )
$ 6,599 $ 5,357

 

Depreciation and amortization included in selling, general and administrative expense

  664     574  
Total depreciation and amortization $ 7,263   $ 5,931  
 
 
Share-based compensation included in direct costs:
Laboratory $ 173 $ 183
 

Share-based compensation included in selling, general and administrative expense:

Laboratory 202 197
Animal hospital 333 324
Medical technology 33 28
Corporate   568     485  
  1,136     1,034  

Total share-based compensation

$ 1,309   $ 1,217  

CONTACT:
VCA Antech, Inc.
Tomas Fuller, Chief Financial Officer, (310) 571-6505