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MWI Veterinary Supply Inc. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: February 3, 2012 06:44AM

MWI Veterinary Supply Inc. (MWIV) filed Quarterly Report for the period ended 2012-02-02. Mwi Veterinary Supply Inc. has a market cap of $1.1 billion; its shares were traded at around $86.23 with a P/E ratio of 25.2 and P/S ratio of 0.6. Mwi Veterinary Supply Inc. had an annual average earning growth of 22.8% over the past 5 years.



Highlight of Business Operations:

In the United States, our top ten vendors supplied products that accounted for approximately 72% and 71% of our revenues for the three months ended December 31, 2011 and 2010, respectively, and 71% of our revenues for the fiscal year ended September 30, 2011. Pfizer supplied products that accounted for approximately 24% and 26% of our revenues during the three months ended December 31, 2011 and 2010, respectively, and 24% of our revenues for our fiscal year ended September 30, 2011. Of the Pfizer supplied products, production animal products under a livestock agreement accounted for approximately 14% of our revenues during each of the three months ended December 31, 2011 and 2010, respectively, and approximately 13% of our revenues for our fiscal year ended September 30, 2011. Merck (formerly known as Intervet/Schering-Plough) supplied products that accounted for approximately 14% and 11% of our revenues during the three months ended December 31, 2011 and 2010, respectively, and 11% of our revenues for our fiscal year ended September 30, 2011. No other vendor accounts for more than 10% of our revenues in the United States. Merial, a subsidiary of Sanofi-Aventis, supplies the majority of their products to us under an agency relationship. Commission revenue generated from Merial products accounted for approximately 33% and 27% of total commission revenues during the three months ended December 31, 2011 and 2010, respectively, and 47% of total commission revenues for our fiscal year ended September 30, 2011.

Total Revenues. Total revenues increased 26.1% to $461,901 for the three months ended December 31, 2011, from $366,174 for the three months ended December 31, 2010. Excluding the acquisition of the assets of Micro, revenue growth in the United States was 14.1% for the quarter ended December 31, 2011, compared to the same period in the prior fiscal year. Revenues from Micro, which was acquired on October 31, 2011, were $46,161 for the quarter ended December 31, 2011. Revenue growth in the United Kingdom was 11.0% for the quarter ended December 31, 2011, compared to the same period in the prior fiscal year, consisting of 11.7% organic growth offset by a decline of 0.7% related to foreign currency exchange. Excluding the revenues from Micro, revenues in the United States attributable to existing customers represented approximately 56% of the growth in revenues and revenues attributable to new customers represented approximately 44% of the growth in revenues during the three months ended December 31, 2011. For the purpose of calculating growth rates of new and existing customer revenue, we have defined a new customer as a customer that did not purchase product from us in the corresponding fiscal quarter of the prior year, with the remaining customer base being considered existing customers. Revenues from new customers for each fiscal quarter are summed to arrive at the estimated year-to-date revenue for new customers.

Product sales to related party increased by 5.7% to $15,558 for the three months ended December 31, 2011, from $14,723 for the three months ended December 31, 2010. Commissions were $3,746 for the three months ended December 31, 2011, consistent with $3,714 for the three months ended December 31, 2010. Commissions were negatively impacted by the loss of a pet food line that we represented for most of fiscal year 2011 that we will not represent in fiscal year 2012, partially offset by growth in other agency products that we represent.

Gross Profit. Gross profit increased by 24.8% to $62,514 for the three months ended December 31, 2011, from $50,072 for the three months ended December 31, 2010. The change in gross profit is primarily a result of increased total revenues as discussed above. Gross profit as a percentage of total revenues was 13.5% and 13.7% for the three months ended December 31, 2011 and 2010, respectively. Vendor rebates for the three months ended December 31, 2011 increased by approximately $535 compared to the three months ended December 31, 2010.

Selling, General and Administrative (“SG&A”). SG&A expenses increased 25.3% to $38,907 for the three months ended December 31, 2011, from $31,047 for the three months ended December 31, 2010. The increase in SG&A expenses was primarily due to the addition of Micro and compensation costs from increased headcount to support the revenue growth. Included in the increase in SG&A expenses for the quarter ended December 31, 2011 are direct acquisition-related and integration expenses of $235 related to the Micro acquisition. SG&A expenses as a percentage of total revenues were 8.4% for the three months ended December 31, 2011, compared to 8.5% for the three months ended December 31, 2010.

Read the The complete Report



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