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): April
28, 2011
VCA
Antech, Inc.
(Exact
Name of Registrant as Specified in Charter)
Delaware |
001-16783 |
95-4097995 |
(State or Other Jurisdiction of Incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
12401 West Olympic Boulevard |
(Address of Principal Executive Offices) |
(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 April 28, 2011, VCA Antech, Inc. issued a press release which included earnings for the first quarter of fiscal year 2011. 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 April 28, 2011, regarding earnings for the first quarter of fiscal year 2011.
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.
April 28, 2011 | VCA Antech, Inc. |
/s/ Tomas W. Fuller |
|
By: Tomas W. Fuller | |
Its: Chief Financial Officer |
EXHIBIT INDEX
Exhibits
99.1 Press release dated April 28, 2011, regarding earnings for the first quarter of fiscal year 2011.
4
Exhibit 99.1
VCA Antech, Inc. Reports First Quarter 2011 Results and Affirms Financial Guidance for 2011
LOS ANGELES--(BUSINESS WIRE)--April 28, 2011--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, 2011 as follows: revenue increased 7.4% to a first quarter record of $355.1 million, net income was $28.8 million, and diluted earnings per common share was $0.33.
Bob Antin, Chairman and CEO, stated, “We are pleased that our results for the quarter exceeded our expectations primarily due to better than expected internal growth rates in our Animal Hospital and Laboratory segments. Although the persistent weakness in the economy continues to put pressure on our internal growth rates and our operating results, we are encouraged by the stability we are seeing in our internal growth rates and the sequential improvement in our operating results compared to fourth quarter of 2010.
“Animal Hospital revenue in the first quarter increased 9.4% to $269.9 million driven by acquisitions made in the past twelve months. The combination of a decline in same-store margins due to a decline in same-store revenue and lower margins at acquired animal hospitals has caused our Animal Hospital gross margin to decrease to 14.7% compared to 16.9% for the comparable prior year quarter. Our Animal Hospital operating margin declined to 12.4% compared to 14.6% for the comparable prior year quarter. Our same-store revenue declined by 2.2% and our same-store gross profit margin declined to 14.9% from 16.9%. During the quarter, we acquired two animal hospitals which had historical combined annual revenue of $4.8 million.
“Laboratory revenue in the first quarter increased 1.8% to $79.5 million. Internal revenue growth was 1.7%. Our Laboratory gross profit margin decreased by 50 basis points to 46.2% and our operating margin decreased 110 basis points to 37.8%.
“Medical Technology revenue in the first quarter increased 20.9% to $19.1 million and gross profit decreased 7.7% to $4.5 million. Both our revenue and related cost were impacted by a $4.0 million one-time cumulative adjustment. Gross profit margin was 23.3% compared to 30.6% in the prior year primarily due to the impact of the adjustment mentioned above, in addition to a change in our product mix. The operating margin decreased to 4.7% from 8.1% as SG&A expenses decreased to 18.6% from 22.3%.”
2011 Financial Guidance
While we experienced continued weakness in the first quarter, as noted above, our results for the quarter exceeded our internal budget and we continue to be on track to meet our full year guidance.
Accordingly, we affirm our FY 2011 guidance as follows:
The continued uncertainty and lack of visibility regarding the timing and degree of the recovery in our business sector is making it particularly difficult to predict consumer demand for our services and to provide guidance relative to future results. Further, the preceding factors make it more likely that our actual results could differ from expectations.
Conference Call
We will discuss our company’s first quarter 2011 financial results during a conference call today, April 28th, 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 by dialing (877) 293-5492. 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 this forward-looking information. Our Animal Hospital and Laboratory revenues have been materially adversely impacted by the current economic recession. We are unable to forecast accurately the timing or degree of any economic recovery. Further, trends in the general economy may not be reflected in our business at the same time or in the same degree as in the general economy. The timing and degree of any economic recovery, and its impact on our business, are among the important factors that could cause actual results to differ from this forward-looking information. Among other factors that could cause our actual results to differ from this forward-looking information are: an increase in the level of direct costs or a failure to increase revenue at a level necessary to maintain our expected operating margins, a material adverse change in our financial condition or operations; the level of selling, general and administrative costs; the effects of our recent and future acquisitions and our ability to effectively manage our growth and achieve operating synergies; a decline in demand for any 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 risks are discussed in our Report on Form 10-K for the year ended December 31, 2010 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, | ||||||||||||||||||
2011 | 2010 | |||||||||||||||||
Revenue: | ||||||||||||||||||
Animal hospital | $ | 269,941 | $ | 246,668 | ||||||||||||||
Laboratory | 79,549 | 78,180 | ||||||||||||||||
Medical technology | 19,096 | 15,797 | ||||||||||||||||
Intercompany | (13,463 | ) | (9,911 | ) | ||||||||||||||
355,123 | 330,734 | |||||||||||||||||
Direct costs | 275,345 | 247,939 | ||||||||||||||||
Gross profit: | ||||||||||||||||||
Animal hospital | 39,553 | 41,677 | ||||||||||||||||
Laboratory | 36,730 | 36,528 | ||||||||||||||||
Medical technology | 4,458 | 4,831 | ||||||||||||||||
Intercompany | (963 | ) | (241 | ) | ||||||||||||||
79,778 | 82,795 | |||||||||||||||||
Selling, general and administrative expense: | ||||||||||||||||||
Animal hospital | 6,083 | 5,587 | ||||||||||||||||
Laboratory | 6,636 | 6,154 | ||||||||||||||||
Medical technology | 3,556 | 3,515 | ||||||||||||||||
Corporate | 9,908 | 10,884 | ||||||||||||||||
26,183 | 26,140 | |||||||||||||||||
Loss on sale and disposal of assets | 89 | 25 | ||||||||||||||||
Operating income | 53,506 | 56,630 | ||||||||||||||||
Interest expense, net | 4,019 | 3,167 | ||||||||||||||||
Other expense | 58 | 25 | ||||||||||||||||
Income before provision for income taxes |
49,429 | 53,438 | ||||||||||||||||
Provision for income taxes | 18,933 | 20,506 | ||||||||||||||||
Net income | 30,496 | 32,932 | ||||||||||||||||
Net income attributable to noncontrolling interests | 1,657 | 997 | ||||||||||||||||
Net income attributable to VCA Antech, Inc. | $ | 28,839 | $ | 31,935 | ||||||||||||||
Diluted earnings per share | $ | 0.33 | $ | 0.37 | ||||||||||||||
Shares used for computing diluted earnings per share |
87,245 | 86,870 | ||||||||||||||||
|
||||||||||||||||
VCA Antech, Inc. | ||||||||||||||||
Consolidated Balance Sheets | ||||||||||||||||
(Unaudited) | ||||||||||||||||
(In thousands) | ||||||||||||||||
March 31, | December 31, | |||||||||||||||
2011 | 2010 | |||||||||||||||
Assets | ||||||||||||||||
Current assets: | ||||||||||||||||
Cash and cash equivalents | $ | 130,399 | $ | 97,126 | ||||||||||||
Trade accounts receivable, net | 54,888 | 49,224 | ||||||||||||||
Inventory | 43,057 | 40,760 | ||||||||||||||
Prepaid expenses and other | 19,349 | 21,138 | ||||||||||||||
Deferred income taxes | 18,875 | 19,019 | ||||||||||||||
Prepaid income taxes | 8,727 | 19,047 | ||||||||||||||
Total current assets | 275,295 | 246,314 | ||||||||||||||
Property and equipment, net | 334,343 | 331,687 | ||||||||||||||
Other assets: | ||||||||||||||||
Goodwill | 1,094,704 | 1,092,480 | ||||||||||||||
Other intangible assets, net | 44,940 | 46,986 | ||||||||||||||
Deferred financing costs, net | 6,312 | 6,700 | ||||||||||||||
Other | 40,256 | 42,255 | ||||||||||||||
Total assets |
$ | 1,795,850 | $ | 1,766,422 | ||||||||||||
Liabilities and Equity | ||||||||||||||||
Current liabilities: | ||||||||||||||||
Current portion of long-term debt | $ | 27,753 | $ | 28,101 | ||||||||||||
Accounts payable | 30,710 | 31,970 | ||||||||||||||
Accrued payroll and related liabilities | 46,465 | 35,754 | ||||||||||||||
Other accrued liabilities | 41,533 | 45,769 | ||||||||||||||
Total current liabilities | 146,461 | 141,594 | ||||||||||||||
Long-term debt, less current portion | 492,046 | 498,935 | ||||||||||||||
Deferred income taxes | 87,616 | 82,131 | ||||||||||||||
Other liabilities | 25,906 | 28,478 | ||||||||||||||
Redeemable noncontrolling interest | 6,218 | 5,799 | ||||||||||||||
VCA Antech, Inc. stockholders' equity: | ||||||||||||||||
Common stock | 86 | 86 | ||||||||||||||
Additional paid-in capital | 347,619 | 347,848 | ||||||||||||||
Accumulated earnings | 679,092 | 650,253 | ||||||||||||||
Accumulated other comprehensive income | 1,102 | 737 | ||||||||||||||
Total VCA Antech, Inc. stockholders' equity | 1,027,899 | 998,924 | ||||||||||||||
Noncontrolling interest | 9,704 | 10,561 | ||||||||||||||
Total equity | 1,037,603 | 1,009,485 | ||||||||||||||
Total liabilities and equity | $ | 1,795,850 | $ | 1,766,422 | ||||||||||||
VCA Antech, Inc. | ||||||||||||||||||
Consolidated Statements of Cash Flows | ||||||||||||||||||
(Unaudited) | ||||||||||||||||||
(In thousands) | ||||||||||||||||||
Three Months Ended | ||||||||||||||||||
March 31, | ||||||||||||||||||
2011 | 2010 | |||||||||||||||||
Cash flows from operating activities: | ||||||||||||||||||
Net income | $ | 30,496 | $ | 32,932 | ||||||||||||||
Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||||||||||||
Depreciation and amortization | 13,380 | 10,707 | ||||||||||||||||
Amortization of debt costs | 388 | 132 | ||||||||||||||||
Provision for uncollectible accounts | 1,297 | 1,492 | ||||||||||||||||
Net loss on sale and disposal of assets | 89 | 25 | ||||||||||||||||
Share-based compensation | 1,068 | 2,088 | ||||||||||||||||
Deferred income taxes | 8,035 | 7,232 | ||||||||||||||||
Excess tax benefit from exercise of stock options | (185 | ) | (264 | ) | ||||||||||||||
Other | (358 | ) | (114 | ) | ||||||||||||||
Changes in operating assets and liabilities: | ||||||||||||||||||
Accounts receivable | (6,933 | ) | (6,511 | ) | ||||||||||||||
Inventory, prepaid expenses and other assets | 1,417 | 644 | ||||||||||||||||
Income taxes | 9,922 | 12,527 | ||||||||||||||||
Accounts payable and other accrued liabilities | (8,120 | ) | (288 | ) | ||||||||||||||
Accrued payroll and related liabilities | 10,734 | 9,954 | ||||||||||||||||
Net cash provided by operating activities | 61,230 | 70,556 | ||||||||||||||||
Cash flows from investing activities: | ||||||||||||||||||
Business acquisitions, net of cash acquired | (5,812 | ) | (9,247 | ) | ||||||||||||||
Real estate acquired in connection with business acquisitions | (1,200 | ) | (1,300 | ) | ||||||||||||||
Property and equipment additions | (12,034 | ) | (16,049 | ) | ||||||||||||||
Proceeds from sale of assets | 22 | 6 | ||||||||||||||||
Other | (131 | ) | (61 | ) | ||||||||||||||
Net cash used in investing activities | (19,155 | ) | (26,651 | ) | ||||||||||||||
Cash flows from financing activities: | ||||||||||||||||||
Repayment of long-term obligations | (7,301 | ) | (10,822 | ) | ||||||||||||||
Distributions to noncontrolling interest partners | (652 | ) | (989 | ) | ||||||||||||||
Proceeds from issuance of common stock under stock option plans | 1,175 | 2,858 | ||||||||||||||||
Repurchase of common stock | (2,337 | ) | (2,253 | ) | ||||||||||||||
Excess tax benefit from exercise of stock options | 185 | 264 | ||||||||||||||||
Net cash used in financing activities | (8,930 | ) | (10,942 | ) | ||||||||||||||
Effect of currency exchange rate changes on cash and cash equivalents | 128 | 53 | ||||||||||||||||
Increase in cash and cash equivalents | 33,273 | 33,016 | ||||||||||||||||
Cash and cash equivalents at beginning of period | 97,126 | 145,181 | ||||||||||||||||
Cash and cash equivalents at end of period | $ | 130,399 | $ | 178,197 | ||||||||||||||
|
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VCA Antech, Inc. | |||||||||||||||||||
Supplemental Operating Data |
|||||||||||||||||||
(Unaudited - In thousands) | |||||||||||||||||||
As of | |||||||||||||||||||
Table #1 | March 31, | December 31, | |||||||||||||||||
Selected consolidated balance sheet data | 2011 | 2010 | |||||||||||||||||
Debt: | |||||||||||||||||||
Senior term notes | $ | 487,500 | $ | 493,750 | |||||||||||||||
Other debt and capital leases | 32,299 | 33,286 | |||||||||||||||||
Total debt | $ | 519,799 | $ | 527,036 | |||||||||||||||
Three Months Ended | |||||||||||||||||||
Table #2 | March 31, | ||||||||||||||||||
Selected expense data | 2011 | 2010 | |||||||||||||||||
Rent expense | $ | 13,271 | $ | 12,109 | |||||||||||||||
Depreciation and amortization included in direct costs: |
|||||||||||||||||||
Animal hospital | $ | 9,799 | $ | 7,279 | |||||||||||||||
Laboratory | 2,369 | 2,324 | |||||||||||||||||
Medical technology | 410 | 374 | |||||||||||||||||
Intercompany | (301 | ) | (240 | ) | |||||||||||||||
12,277 | 9,737 | ||||||||||||||||||
Depreciation and amortization included in selling, general and administrative expense |
1,103 | 970 | |||||||||||||||||
Total depreciation and amortization | $ | 13,380 | $ | 10,707 | |||||||||||||||
Share-based compensation included in direct costs: | |||||||||||||||||||
Laboratory | $ | 78 | $ | 161 | |||||||||||||||
Share-based compensation included in selling, general and administrative expense: |
|||||||||||||||||||
Animal hospital | 218 | 377 | |||||||||||||||||
Laboratory | 240 | 315 | |||||||||||||||||
Medical technology | 55 | 77 | |||||||||||||||||
Corporate | 477 | 1,158 | |||||||||||||||||
990 | 1,927 | ||||||||||||||||||
Total share-based compensation | $ | 1,068 | $ | 2,088 |
CONTACT:
VCA Antech, Inc.
Tomas Fuller
Chief Financial Officer
(310)
571-6505